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CONTENTS TABLE OF CONTENTS
1
LIST OF TABLES
5
LIST OF FIGURES
6
LIST OF ABBREVIATIONS
9
Chapter 1 – INTRODUCTION Sl No 1.1 1.2 1.3 1.4 1.5
1.6 1.7 1.8 1.9
Particulars
Background of the study Reason for doing the study Objectives of the study Scope of the study Research Methodology 1.5.1 Research Design 1.5.2 Data sources 1.5.3 Sample size and Method of sampling 1.5.4 Analysis of data Audience for report Limitations of the study Future scope of the study Chapterisation plan
Page
11 15 16 16 17 17 17 18 18 18 19 19 20
Chapter 2 – REVIEW OF LITERATURE 2.1 2.2
2.3
Purpose of secondary literature Introduction 2.2.1 National 2.2.2 International Conclusion
21 21 21 31 36
Chapter 3 – REFRACTORY INDUSTRIES- A CONCEPTUAL FRAMEWORK 3.1 3.2
Refractory-What and Why? Importance of the refractory Industry
37 38
3.3
History of the refractory development
41
3.3.1. Recent Milestones in refractories development
41
3.6
Global and regional demand for refractory materials Production process, inputs and outputs 3.5.1. Machines used in the production process Types of refractories production in India
44 47 50 57
3.7 3.8
Refractory Production Typical product specification of India Refractory
67 72
3.9
Refractory for social cause
88
4.0
Steady progress in the refractory sector in India
89
4.1
Performance of the refractory in India in the last 25 years.
92
4.2
Sparkling future ahead for refractory industries
94
3.4 3.5
Chapter 4- REFRACTORY MANUFACTURING PLANTS IN ORISSA 4.1
Glance of Orissa
103
4.2
Indo Flogate Refractories Ltd(IRL) 4.2.1. Products 4.2.2. Investment rationale 4.2.3. Financial performance 4.2.4 Community outreach and environment management Tata Krosaki Refractories Ltd(formerly known as Tata Refractories Ltd-TRL) 4.3.1. Products 4.3.2. Investment rationale 4.3.3 Financial performance 4.3.4 Community outreach and environment management
105 109 111 115 117 117
OCL India Ltd 4.4.1. Products 4.4.2. Investment Rationale 4.4.3. Financial performance 4.4.4. Community outreach and environment management Sarvesh Refractories Ltd 4.5.1. Products 4.5.2 Investment rationale 4.5.3 Financial performance
127 130 131 131 132 132 133 134 134
4.3
4.4
4.5
119 123 124 126
2
4.6
4.7 4.8 4.9
4.5.4 Community outreach and environment management Manishri Refractories and Ceramics (P) Ltd 4.6.1.Products 4.6.2 Investment rationale 4.6.3 Financial performance 4.6.4 Community outreach and environment management Research and Development activities Packaging and Shipping Products and competitors in the domestic market.
135 135 135 137 137 138 138 143 145
Chapter 5 - COMPETITIVENESS REVIEW 5.1 5.2 5.3
5.4 5.5
5.6
Introduction Competitive dimensions and advantages in modern economic environment Competitive advantage of refractory industries in Orissa 5.3.1.1 Competitive advantages of TRL 5.3.1.2 Core competencies of TRL 5.3.2.1 Competitive advantages of IRL 5.3.2.2 Core competencies of IRL 5.3.3.1 Competitive advantages of OCL 5.3.3.2 Core competencies of OCL 5.3.4.1 Competitive advantages of Sarvesh refractories 5.3.4.2 Core competencies of Sarvesh refractories 5.3.5.1 Competitive advantages of Manishri Refractories 5.3.5.2 Core competencies of Manishri Refractories Major globalization initiatives of IRL and TRL
148 148
SWOT analysis of refractory industries in Orissa 5.5.1 Strengths for the refractory manufacturers in Orissa 5.5.2 Opportunities for the refractory manufacturers in Orissa 5.5.3 Weaknesses for the refractory manufacturers in Orissa 5.5.4 Threats for the refractory manufacturers in Orissa Analysis of Global refractory market 5.6.1 Country Profile-Russia
165 169 170 171 173 176 176
151 151 153 154 155 156 156 157 158 159 159 160
5.6.2. RHI Group-World leading refractory manufacturer 177 5.6.2.1. RHI activities 178 5.6.2.2. RHI growth potentials in 179 BRIC 5.6.2.3 RHI establish brands 179 5.6.3. Vesuvius Refractory 180 3
Chapter 6- MARKETING 6.1
6.2
6.3
Marketing of refractory products 6.1.1. Types of marketing. 6.1.2. The internet and B2B marketing(industrial) The intelligent Industrial Marketers 6.3.1. Refractory information online 6.3.2. Metaljunction Marketing practices adopted by refractory industries in Orissa
180 184 192 205 211 216 217
Chapter 7 - RESEARCH METHODOLOGY 7.1 7.2 7.3
7.4 7.5
Introduction Research Design Data Sources 7.2.1 7.2.2 Sampling methods Method of analysis
Primary Data Secondary Data
225 225 226 226 227 227 228
Chapter 8 - EMPIRICAL FINDINGS 8.1 8.2 8.3
Introduction Data analysis and Interpretation Result of the study
228 229 233
Chapter 9 - CONCLUSION 9.1 9.2
Summary Suggestion and Conclusion
Appendixes Bibliography List of major Refractory manufacturers in India Marketing offices of Refractory manufacturers in Orissa Questionnaire
238 240
251 251 260 263 275
4
List of Tables Table No
Title
Page
1
India’s GDP growth rate from 2006-2010
11
2
Market share of Refractory Industries of different 12 regions in the world market.
3
Contribution
of Refractory Products in different 13
Industries 4
Consumption of refractory industry -wise
14
5
World cement demand
39
6
Milestones in the development of Refractories in India
41
7
.World refractory demand by major regions
43
8
Types and Descriptions of Refractory Produced
58
9
Types and Characteristics of Raw Materials used in 63 Refractory Manufacture Type
10
Lists types of oxide, non-oxide, and composite 65-66 refractories; their characteristics; and their applications.
11
BIS specification of application areas in the user 73-88 industries
12
Refractory industry category-wise
90
13
13.1 Growth of steel production in India 2002-10
101
13.2 World refractory demand by market(end –use)
101
14
Capacity –Globally of IRL, Kolkata
108
15
TRL’s financial performance
124
16
OCL’s milestones year wise
128
17
OCL’s production capacity of different products
129
18
OCL’s financial performance
132 5
19 20
Production capacity of Sarvesh group located across the 133 India. Sarvesh refractorie’s financial performance 134
21
Clientele database of Manishri.
136
22
Manishri’s financial performance
138
23
IRL’s global acquisition
163
24
Russia: Refractory Demand and Supply, 2002-12
176
25
Number of “hits” on www.google.com between 2003 and 212 2009
26
Differences in the quantity of information obtained from 212 several available search engines
27
Annual report of the quantity and value of the U. S. 214 production of clay and nonclay refractories
28
Respondent and product characteristics
229
29
Reliability scores: split half T –test results
231
30
Factor pattern and loadings
232
31
Elements of standardisation and marketing variables: 234 prevalence and relationship
32
Regression results: standardisation and performance
236
List of Figures Fig No
Title
Page
1
Refractory export from India-Product wise
40
2
Specific product production processes for various refractory 49 products
3
Different machines used to mix or knead refractory products 52 6
3.1.Vacuum Press
53
3.2.Friction Press (A) and Hydraulic Screw Press(B)
53
3.3.Vibrating press
53
3.4.Cross section of Cold Isosatic Press-CIP
53
4
Tunnel kiln
55
5
Round periodic kiln
57
6
Design of a shuttle kiln
57
7
Refractory production in India (2002-2008). 7.1.Refractories production in India -firebricks(2002-2009)
67
7.2. Refractory production in India-High Alumina (2002- 68 2009) 7.3. Refractory production in India - Silica(2002-2009)
68
7.4. Refractory production in India-Basic (2002-2009)
69
7.5. Refractory production in India-Speciality(2002-2009)
70
7.6. Refractory production in India -Monolithics(2002- 71 2009) 8
8.1 Improvements in the refractory performance in India 93 (BOF) 8.2.Improvements in the refractory performance in India 93 (BF trough) 8.3. Improvement in the refractory performance in India 94 (Steel Ladle) 8.4. Improvement in the refractory performance in India 94 (Slide Gate)
9
9.1. Four phases of global steel evolution
97
9.2. Global steel production 2008
99
10
A glance at the refractory industries in Orissa
103
11
Manufacturing facilities in different countries-IRL
106 7
12
Liquid metal flow during steel making process
109
13
IRL new project of CC Refractory at Kandla SEZ
113
14
IRL-Financial performances 2003-2010
116
15
Products manufactured by TRL
120
16
Lab Equipments
140142
17
Export Packaging
144
18
Prime products and Competitors in domestic market
146147
19
RHI Share in the core activities
177
20
RHI plant setup worldwide
178
21
RHI’s established brands
179
22
Industrial buyer Behavior Model
194
23 24
Industrial vendor’s website and the influencing factors in a 207 buying decision. Online sourcing activities by industrial buyers 208
25
Traditional Decision Making Process
209
26
Online Decision Making Process
210
27
Four P components of the marketing mix
218
8
Glossary of terms Institutional Names BIS-Bureau of Indian Standards BRIC-Brazil, Russia, India and China. CRISIL-Credit Rating and Information Services of India Ltd. CAPEXIL-Chemical and Allied Products Export Promotion Council CGCRI-Central Glass & Ceramic Research Institute CIS-Commonwealth Independent State DSIR-Dalmia Institute of scientific and Industrial Research ISO-International Organization for Standardization IMA-The Industrial Minerals Association IRMA-Indian Refractory Makers Association RDCIS-Research & Development Centre for Iron & Steel SEZ-Special Economic Zone US-United States of America
Names, policies, techniques and schemes
AOD-Argon Oxygen Decarburization B2B-Business-to-Business B2C-Business-to-Consumer DBMC-Direct Bonded Mag-Chrome Bricks ERP-Enterprise Resource Planning EBITDA-Earnings Before Interest, Taxes, Depreciation and Amortisation EMAS -Eco-Management and Audit Scheme ETS-Emissions Trading Scheme GDP-Gross Domestic Product IPPC-Integrated Pollution Prevention and Control 9
IPR-Intellectual Property Rights NEPSI -European Network for Silica OHS-Occupational Health and Safety PAT-Profit after Tax REACH-A regulation concerning the Registration, Evaluation, Authorisation and restriction of Chemicals SEO-search engine optimization SWOT-Marketing
/
Strategic
analysis
technique
highlighting
Strengths,Weaknesses, Opportunities and Threats SME-Small and Medium-Sized Enterprises (typically defined as a firm with under 250 employees)
Units Bn-Billion CCS-Cold crushing strength CO2-Carbon dioxide m-Million m2-Squared-metres mt-Million tonnes Mtpa- metric tones per annum Pa-Per annum pp-Percentage point RUL-refractoriness under load. VOCs-Volatile Organic Compounds Tpa-tons per annum
10
CHAPTER-1 1-INTRODUCTION 1.1 BACKGROUND OF THE STUDY
India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services1, Table 1 illustrates India’s GDP growth rate from 2006 to 2010. Table 1 India’s GDP growth rate from 2006 to 2010 Year
GDP Growth (%)
2006
8.5
2007
9.0
2008
7.3
2009
7.4
2010
8.3
Sources:2010 CIA WORLD FACTBOOK Three main sectors such as agriculture, industry and service which contribute to the Indian economy account 18%, 29% and 54% of the GDP respectively2. Industrial sector has been a major contributor to India’s economy. Industrial goods are defined as companies which buy products and services to help them produce other goods and services3. Industrial goods mainly deal with4: accessory equipments (eg. hand tools, lift trucks), business service (eg. banking and maintenance), installations (eg. furnaces, refractory) ,parts ,raw materials, semi manufactured goods and supplies(maintenance, repair and operating supplies). Out of all installation is one of the important aspects in the manufacturing process in converting the raw material in to finished goods. 1. 2. 3. 4.
http://www.theodora.com/wfbcurrent/india/india_economy.html www.traveldocs.com/in/economy.htm www.traveldocs.com/in/economy.htm Verma M.M and Agarwal R.K, 1992, Managerial Economics ,King Books,Delhi,pp-26-59.
11
Installation that constitutes the linings for high-temperature furnaces and reactors and other processing units are made from heat resistance materials . The heat resistant materials are made from natural and synthetic materials, usually nonmetallic, or combination of compounds and minerals such as alumina, fireclays, bauxite, chromite, dolomite, magnesite, silicon carbide, zirconia, and others which are called "Refractory”5.
In 2010, the contribution of Indian refractory industries is 4% of the Global Market 6. However the refractory industries have been in good progress for exporting its products. The export of refractories was Rs. 314 crores in 20062007, Rs.452 crores in 2007-2008, Rs. 446 Crores in 2009-2010 and Rs. 474 Crores in 2010-20117. Table 2 below illustrates the share of Refractory Industries of different regions in the world market8. Table 2 Market share of Refractory Industries of different regions in the world market Region
Market Share(%)
Asia/Pacific
36
India
4
Eastern Europe
23
Latin America
4
NAFTA(USA, Canada and Mexico)
14
Western Europe
15
Others (Africa and middle east)
4
Sources: Iron & steel review, 2010, Published by ISR Infomedia, monthly, pp-8-9. 5.Sheppard, Laural M.. 2000. “Trends in Refractory Technology: Highlights of the AcerS Annual Meeting.” Refractory Applications, US. 6.Internet Sources: www.irmaindia.org 7.IRMA Journal , published by Indian refractory makers association, Kolkata,Vol XXXVIII, No3, Sep 2005 8. Iron & steel review, published by central iron and steel research institute,Kolkata,oct-2010, page 8-9.
12
The table 3 below indicates the contribution of refractory products in different industry for the production of steel, cement , glass, ceramics and non ferrous metals in the country as well as outside the country.
Table 3 Contribution of refractory products in different industry
Steel Cement Glass
Ceramics Non
Others
Ferrous International 70% 12%
3-4%
6%
2-3%
4%
Domestic
4%
3%
3%
6%
74% 7%
Source: IRMA, Aug 2011
The new upcoming projects of Tata Steel, Essar, Posco, Arcelor Mittal and SAIL in Orissa will surely increase the demand of refractory products. To meet the future demand, India’s refractory makers are increasing their production capacities. Moreover the aggregate production
capacity of
refractory in India is around 1,500,000 metric tons per year, whereas the actual production in India however, is between 700,000 and 1,000,000 metric tons per annum9and in worldwide refractory market it is estimated to be 22 to 25 million tones approximately 40 million tons.
as opposed to a production capacity of 10
9. Internet sources:www.irmaindia.org 10. Iron and steel review, published by central iron and steel research institute ,Kolkata,oct-2000 page 49.
13
Orissa is one of the states which has a few reputed and leading refractory manufacturers. Tata Krosaki Refractories Ltd(formerly Tata Refractories Ltd, TRL), Belpahar under Jharsuguda district, Orissa Cement Limited (OCL
Ltd)
,Rajgangpur
under
Sundargarh
district,
Indo-Flogates
Refractories Limited (IRL) at Rourkela, Sarvesh Refractory Pvt. Ltd at Rourkela under Sundargarh district and Manishri Ceramics and Refractor Ltd ,Cuttack are capable of making quality refractory products to stand themselves to compete in both domestically as well as global market. Indian refractory manufacturers are facing a big threat because of the influx of Chinese refractory products to India. Because of the current import trend shown by steel, cement, glass and ceramics manufacturers
from China,
Indian refractory manufacturers are looking worried as around 20 percent of the refractory produced in India are imported and most of them are sourced from China. Import from China stood at a staggering high at Rs.818 crores in 2007-2008 and Rs 1493 crores in 2010-11, posed a threat for the domestic refractory manufacturers11. Table 4.below lists the consumption of refractory industry -wise. Except the steel industry, consumption of refractory in industries like aluminium and cement is insignificant. Table 4 Consumption of refractory industries -wise Industry
Refractory consumptions per ton
Steel
12 kg
Aluminum
4-5 kg
Cement
0.8-0.9 kg
(Sources: Steel Insights,2010, monthly issue published by mjunctionEdge)
11.steelworld,published by steelworld’s publications,Mumbai, March 2009, pp-19
14
Due to the technological upgradation in the manufacturing process of the core industries like steel, copper, aluminum and glass, refractory application has been drastically reduced. During the past two decades the refractory industries in India have changed at a rapid pace with new materials, production , application techniques and innovative market strategies in meeting the customer need of the user industries in India and worldwide too. The present study
entitled “Marketing of refractory products- a study of refractory
industries in Orissa” would be a guiding lamp for the Indian refractory makers in Orissa trying to market their products in the domestic and international arena with their strengths to reflect their competitiveness against the world trends.
1.2 REASONS FOR THE STUDY AND ITS IMPORTANCE The purpose of this study is to depict the outlook of the refractory makers in the world, India as well as Orissa with the present operational parameters and marketing strategies adopted with their products for the domestic and international customers. In comparison to other industries, the refractory industries are small. They are yet to receive due recognition because of their insignificant size in comparison to the key user industries like steel, cement, aluminum etc. However, these are highly specialized industries and their contribution to the Indian economy cannot be overlooked. Therefore, the present study will be an eye-opening for the Indian refractory industries in general and refractory industries of Orissa in particular to know themselves and to have a deeper understanding of the theory, principle and application of the refractory marketing philosophies for increasing their staying power in the market.
15
1.3 OBJECTIVES OF THE STUDY:
The objectives of the present study entitled “Marketing of refractory products- a study of refractory industries in Orissa” is: 1. To have a conceptual study of refractory market in the world, India as well as Orissa. 2. To explore the Indian refractory producers with respect to production, sales, domestic share, share of export and revenue earned for the last five years i.e. 2004 to 2011. 3. To know the type of domestic as well as international customers purchasing the refractory products from the refractory Industries located in Orissa. 4. To study the different products and marketing strategies adopted by the refractory industries in Orissa. 5. To study the competitive advantages of the refractory industries located in Orissa for marketing their products globally. 6. To study the marketing standardization adopted by the refractory industries located in Orissa for the international customers based on the four key marketing mix elements. 7. To highlight the problems faced by the refractory producers in marketing their products. 8. To suggest measures for the growth and development of refractory industries in India in general and refractory Industries situated in Orissa in particular.
1.4 SCOPE OF THE STUDY 1. The scope of the study has been limited to heat treating furnaces for ferrous and nonferrous metals, and annealing furnaces for glass and 16
ceramics. 2. It provides a comprehensive picture about the different types of furnaces with regard to their sizes, shapes, capacities, and price ranges. 3. It includes the information related to the specifications of refractory for different types of furnaces. It also discusses the different types of heating and modern control systems available in refractory industries. 4. The present study vividly analyzes the marketing strategies adopted by different refractory industries especially refractory industries in Orissa. 5. The study evaluates the elements of standardization for the refractory products marketed domestically as well as globally. 6. It discusses the domestic as well as the world market for the refractory industries and indicates current trends and future prospects. 1.5 RESEARCH METHODOLOGY 1.5.1 RESEARCH DESIGN Descriptive research design is used to obtain information concerning the current status of the phenomena to describe “what exists” with respect to variables or conditions in a situation. The methods involved range from the survey which describes the status quo, the correlation study which investigates the relationship between variables, the developmental study which seeks to determine changes over time. The study is presented in a systematic way to identify the refractory manufacturers and their customers along with the current and future market potential. 1.5.2 SOURCES OF DATA The information for the study has been derived from a variety of sources. The theoretical aspects of fundamental principles on heat treatment processes have been collected from different books. Major amount of secondary data have been collected from the Indian Refractory Makers Association (IRMA), Kolkata and Technology Information, Forecasting and Assessment Council 17
(TIFAC) , New Delhi. Secondary data on international refractory markets have been obtained from journals eg. American Ceramic Society , Published by American Ceramic Society Inc., monthly issue and Journal of South East Asian Iron and Steel Institute journal, Published by South East Asian Iron and Steel Institute, quarterly issue. Primary data have been gathered mostly from face to face interaction with the executives of different departments of refractory industries in Orissa through the structured questionnaire. 1.5.3 SAMPLE SIZE AND METHOD OF SAMPLING In order to collect data for this study, the researcher has taken the help of nonprobability(Judgment and convenient) method of sampling to select 64 officials working as personnel in different managerial cadre like, general manager, chief manager, operational managers indifferent refractory industries of Orissa. Besides that 64 raw materials suppliers, and 64 customers from the refractory industries of Orissa have been touched to determine the marketing aspects of the organization and the industries. 1.5.4 ANALYSIS OF DATA After the final data collection was over, the researcher tabulated the collected data from different respondents and analyzed them with the help of recommended statistical package namely, SPSS version 15. 1.6 AUDIENCE FOR REPORT 1. The study will help the refractory industries in general and Orissa in particular for marketing their products domestically and globally. 2. The present study is meant for people who are interested in the heat or treatment of metals like iron, steel, and nonferrous metals, and of other materials like glass and ceramic parts. 3. Investment-oriented people will be able to evaluate the potential of 18
Refractory Industries in Orissa and India. 4. Manufacturers of salt bath, ovens, and lehrs, etc. will also be interested in this work. 5. Refractory manufacturers who make furnaces of various types will have detailed information about their industries. 6. Raw material suppliers who are inclined to look at the potential of this industry will also benefit from this report.
1.7 LIMITATIONS OF THE STUDY: 1. The study of this research work is exclusively to the refractory industries located in Orissa. 2. The research work is mainly limited to the marketing activities of refractory industries in Orissa. 3. Because of the resource constraint of time and money , size of sample has been limited to 64 number and data have been collected from refractory personnel working in refractory industries through non-probability sampling method like judgment and convenience sampling. 1.8 FURTHER SCOPE OF THE STUDY
This study will enrich the scope for other researchers willing to have an indepth analysis in the field of strategic marketing, competitive advantage, core competence etc of one or group of firms. The scope may be enlarged by increasing the size of the sample, number of objectives etc. The research work on refractory products may also be done by comparing the performances of refractory industries located in Orissa and other states of India and refractory industries located in India and other countries, like Asia, Europe etc.
19
1.9 CHAPTERISATION SCHEME An endeavor has been made to divide the total work of the present study in a total of ten chapters. The first chapter provides an overview on the research objectives, methodology and chapterisation on marketing of refractory products in Orissa and India. Review of secondary literature on the studies related to refractory marketing done by national and international authors are highlighted in chapter number two. The third chapter shall discuss the history of refractory development in India, with reference to the present progress in the refractory raw materials, products and specifications. The fourth chapter provides a detailed description of the insight on refractory manufacturing plants located in Orissa. The fifth chapter identifies the competitive advantages and core competencies of refractory manufacturing plants in Orissa. This chapter shall help to develop SWOT analysis based on the challenges refractory manufacturer faces in the future. The sixth chapter shall discuss on the innovative marketing practices i.e. information technology adopted by refractory industries in Orissa. The seventh chapter describes the research methodology used to conduct the present study. The eighth chapter highlights the result of the study based on the data analysis and interpretation. The ninth chapter shall discuss the need of the opinion survey design with summarisation of the opinion based on the elements of standardization received and finally the tenth chapter divided into two 20
sections gives a detail summary of the whole study with suggestion to overcome the challenges faced by the refractory industries in Orissa. CHAPTER 2 2. LITERATURE REVIEW 2.1: PURPOSE OF SECONDARY LITERATURE: The objective of secondary literature review is to examine and evaluate what has been said before on a topic, and establishing the relevance of this information in respect to the present research. It also identifies what has not been said in the literature on a subject (this is called ‘gap in the literature', and filling such gaps with new knowledge). It also discusses the methodologies that have been used in the literature and how these relate to the present chosen method. 2.2: INTRODUCTION: The review of literature is divided into two sections for ease of reference. The sections are as follows: 1. Work already done by Indian nationals 2. Work carried out in international level
2.2.1: National: Gowsami G (1974) :"Raw material potential of Orissa for putting up ceramic industries", a research paper presented in a symposium of development of chemical and allied Industries in Orissa, organized by the Institute on 29.12.1974 at Rourkela.
21
The study provides information based on the availability of raw materials like chromite, bauxite, iron ore, coal etc in Orissa. The result obtained indicates that around 50% of country's bauxite wealth concentrated in Koraput, Kalahandi, Rayagada and Bolangir with 33% iron ore and 24% coal reserves are available in different districts of Orissa.
Tripathy A.K (1975): "Mechanism of destruction of Chrome-Magnesite bricks during service in a high temperature tunnel kiln". Proceeding of the Indian Ceramic Society , July – August at Kolkata. The study explores the possibility of replacing magnesia chromite refractories with chrome free bricks in anode furnace linings. The tests also allowed comparing the performance of different types of magnesia chromite materials.
Panda J.D. (1977) "An Approach to the proper utilization of raw materials in ceramic and associated industries in India", a research paper in the All India seminar on raw materials for glass ceramic and refractory organized by the Geological Survey of India at Shillong in October, 7 - 9, 1977.
The above papers would help Indian refractory makers in developing their own technology indigenously, processing Indian raw materials into high quality products compatible with the changing technology of its user industries, particularly steel industry.
Sahoo. N(1979) A research paper on -" Choice of refractories for burning zone lining of Cement Kilns Basic Vs. High Alumina", was published in the proceedings of the Seminar on refractories for non-ferrous Industries, Calcutta 1979. 22
The study based on the replacement of high alumina brick with basic brick (that contain MgO) for application because of more resistant to reaction with alkali. The solution for converting a high alumina brick lining to a magnesitespinel brick for Cement Kilns.
Mohanty S.K (1981) research paper based on - "Utilization of cement kiln dust in cement manufacture", proceedings of the Seminar on Cement Manufacture, 1981, New Delhi. The globally growing demand of cement results in towering collection of kiln dust from cement plants. The disposal of this fine dust is very difficult and poses an environmental threat. To overcome this problem, research is being carried out in different parts of the world to find out economical and efficient ways and means of using cement kiln dust (CKD) in various applications like soil stabilization, cement production, pavements, waste product stabilization, agriculture and cement products, etc. This study presents a research review on CKD usage in soil and waste utilization and the results of experimental investigation on its usage in building block manufacturing and soil stabilization.
Sharma D.L.N (1982) A research paper based on the -"Selection of chromites for the production of high hot strength basic refractories", presented in the seminar on basic refractories for steel making, NML, Jamshedpur, January 1982. The findings of the paper are based on the refractory properties of chromite and their role in basic refractories is described. The properties and metallurgical applications of chrome-containing refractories are described and finally environmental issues associated with chrome containing refractories are discussed. 23
Sahoo N. (1983) "Basic refractories for cement rotary kilns". Proceeding of the seminar on cement industries, Goa, September 1983. Organized by Madurai productivity council. The paper is based on a novel basic refractory composition. This composition has high resistance to calcium silicates such as cement clinkers and slag formed in steelmaking operations. It also has superior resistance to thermal shock and stresses such as load in high temperature. A refractory brick produced from this composition can be used in the firing zone of a rotary kiln and successfully withstands cement firing operations for a significantly longer period than conventional refractory bricks.
Sahu J.K (1985) Carbon containing basic refractories. All India conference on refractories, Bombay, 1985. Carbon based or containing refractories has been attracting great attention because of their unique properties e.g. high thermal conductivity, low thermal expansion, high resistance to thermal shock and chemical inertness to the slag. They are classified into two groups; carbon/bricks/blocks and carbon containing materials. Carbon containing materials are further classified into carbon
containing
basic
refractories
and
non-basic
refractories.
Manufacturing processes are considered. The properties e.g. physical, thermal, mechanical and chemical are reviewed. Antioxidant and bonding materials for these types of the refractory products are reviewed. Panda J.D (1986) Refractory practices and productivity enhancement in Indian cement industry. Proceedings, national workshop on productivity enhancement in Indian cement industry, 1986. When cement demand and prices are high, kiln "up time" is critical. Yet with 24
current concerns about safety, the people responsible for refractory maintenance and getting the kiln back on line, sometimes feel they are being restricted by rules and policies that may not be practical. This paper will show that kiln up time need not be sacrificed in the name of safety, in fact with modern equipment, techniques planning and organization, safety issues can be addressed while decreasing kiln down time. This paper limits itself to the refractory maintenance aspect of the kiln. Mishra B. (1987) "Mullite refractories for high temperature tunnel kiln". 1st International workshop on Mullite. November 9-10, 1987 ,Tokyo, Japan. The steel and the glass industry are two main users of aluminoǦsilicate based refractories. Among the aluminoǦsilicates mullite is widely used as a refractory material. The paper deals with a brief review of these materials highlighting their properties, methods of production and use. Panda J.D.(1990) :"Synthetic high aluminium raw materials and its application in refractory Industry". National colloquium on the subject at Bhilai, 1990. Traditionally, refractories are made of natural minerals such as bauxite, kyanite, magnesite, fireclay, and chrome ore. Lately, however, the industry has been using man-made synthetic raw materials such as brown-fused alumina, tabular alumina, fused magnesia, silicon carbide, and magnesia alumina. The study deals with the applications of the both natural and synthetic raw materials which are used in equal proportions by the refractory industries.
Goswami G. (1991): "Refractories for the cement industry : A Changing situation. Indian Cement Industry", Desk book - 1991, PP.96 - 101, 1991. The study deals with the development of new refractory products for the cement industry. So the chapters provide complete range of cement plant 25
refractories and castable refractories providing comprehensive solutions to all the cement plant such as pre-calciners, rotary kiln, coolers and ducts.
Panda J.D.(1993): "The role of refractories in pollution control in coke ovens". Iron and Steel Review, Vol 36 (8), PP 13-15 (1993). Biological and chemical oxidation characteristics of two kinds of coke-oven wastewaters, A and B, discharged from a conventional batch coke-oven and a newly developed continuous coke-oven, respectively, were studied for selecting effective treatment processes of the wastewaters. Pollutants contained in Wastewater-A could be removed by biological process with a sufficient effluent quality, while those which existed in Wastewater-B could not be satisfactorily removed. Microbial community structure investigation using the respiratory quinone profile clarified that Pseudomonas putida (dominant quinone: ubiquinone-9) was a dominant species in the biological treatment system. The refractory organic pollutants, existed in Wastewater-B, were mineralized more effectively by Fenton's reagent than by ozone. A wastewater treatment process, in which Fenton's oxidation is followed by a biological treatment, was proposed for the treatment of Wastewater-B based on the experimental results.
Mishra B.(1996): “Development and performance of improved quality magchrome refractories in AOD converter”. Proceedings of
2nd Indian
international. refractory congress. PP. 74-81, 1996 at Kolkata. This paper provides the structure and minerals of mag-chrome refractory bricks from casting ladles after the effect of slag. Optical microscopy in transmitted light served to investigate and present the gradual degradation of the structure of mag-chrome refractory bricks. The degradation ranges from contact of the slag with a brick. Slag gradually penetrates into the brick 26
structure, destroying it and while spreading, it creates favorable conditions for chemical reactions and further destruction. The strength of the effects of slag and refractory bricks' destruction depends on many factors.
Mukhopadhyay (1997) :”Replacement of magnesia chrome refractory bricks by magnesia carbon in VOD ladles”. Proc. UNITECR'97, New Orleans, Vol. II, P.783-788, 1997. In this work the degradation mechanisms of basic refractory materials during the secondary refining in VOD ladles were investigated. A systematic postmortem study of worn refractories taken from various positions and from several VOD ladle working linings allowed the identification of the main wear phenomena. Concurrently, alternative VOD lining configurations, which mimimised the use of costly and environmentally unfriendly magnesiachromite refractories were proposed and successfully industrially tested.
Madono, M. (1999): “Alumina Raw Materials for the Refractory Industry”, CN-Refractories, Vol. 6 (1999) In this study fine reactive alumina powder production was investigated using Bayer gibbsite as a starting material. Experimental studies consist of three steps: in the first step soda content was reduced by means of boric acid and distilled water. In the second step , the effect of heating rate and calcinations temperature on crystal size, phase transformation and surface are were investigated and characterization of the powders was performed by means of X-ray prowder diffraction (XRD) and Scanning Electron microscope (SEM) analysis. In the third step ,the powders obtained optimum conditions were grounded in an attritor mill and then particle size distribution and surface area were measured.
27
Jha D.P(2001) A research paper on - "Choice of Refractories for Ladle Furnace", presented at the Indian Institute of Refractories Engineers, Bokaro Chapter, 20Th Dec. 2001, P - 7. The findings are based on the selection of refractories that maximises the performance of the furnace, kiln or boiler. The results obtained indicate the following points to be considered for the selection of a refractory: type of furnace, presence of slag, area of application, working temperature, extent of abrasion and cost considerations.
Singh.S(2003) A research paper on -"Demand Projection of Refractories for the Next Ten Years"-published by TIFAC, New Delhi, 2003. The paper based on the changing consumption pattern and need of more sophisticated refractories by the industries particularly steel sector, has put a very daunting task ahead of the refractory manufacturers. With this in view, the study has been brought out bringing out a comprehensive document on the projected refractory requirement for the next ten years and also highlighting the technologies/products, which will govern the refractory making/demands over the next ten years. Market Scenario: The current refractory requirement is of around 7 lakh tons only whereas the installed manufacturing capacity is of around 15 lakh tons. In the year 2006-07 the estimated requirement is of around 10.94 lakh tons, and even in 2011-12 it would be 11.61 lakh tons only. So going by the present installed capacity even ten years hence there would be idle capacity. The share of refractories consumed by steel industries is currently about 73% of the total consumption. Over the next ten years the share is estimated to fall to about 57%. During the last three decades, the improvements in refractories quality has led to about 50-60 % decrease in specific consumption of refractory per ton of steel produced. The only industry slated to show sustained increased percentage consumption of overall 28
refractory production over the next ten years is Alumina and Aluminium.
Mishra B(2004). A research paper on - "New Generation Refractories for Glass Industry", presented at Tehran International Conference on Refractories, May 4 - 6, 2004, P - 533 - 537. The paper based on the glass industry were the demand of conditioning refractories have increased due to the down time reduction and increase of the output. Properties are compared for pressed refractory components and ones made by vibrocasting. The scope is considered for using uniformed refractories to supplement traditional ones and replace them in the glass industry. Basic properties are given for the concrete used to make the component. Panda B.K(2005) Research paper based on -"Role of Zircon and Zirconia in Refractory Industry", presented at the National Seminar on Value Addition of Zircon by Chemical & Allied Industries, Berhampur, February 11 - 12, 2005. The paper based on the steel production and glass production is the main refractory sectors that consume zircon and zirconia based refractories. Zircon is used in refractory products for its stability at high temperatures and nonwetability against molten metals. In the steel industry, zircon refractory products include bricks used to line steel making furnaces, injector nozzles and casting channels for refined steel continuous casting. In glass production, there is no cost effective substitute for zircon.
Panda B.K(2007): "Application Of Nano technology In Refractories", presented at the National Conference on Technology for Sustainable utilization of Natural Resources (TechSUNR 2007) 24th February 2007, PP53 at Paralakhemundi, Odisha. The paper based on the most castables and gun mixes use calcium aluminate 29
cement (CAC) to bond the refractory aggregate together. The amount of CAC in the mix can vary from relatively low quantities to 10% or more, depending on the manufacturer and the mix. The presence of CAC is evident by CaO in the chemical composition of the material. Recently, new pumpable refractory products have been developed based on a patented solgel bonding nanotechnology containing no CAC. The pumpable products use a colloidal silica binder (not water) that is mixed with the dry powder component at the jobsite prior to installation.
Sahu P. (2008) :"Development of new generation refractories for cement rotary Kiln". Proceedings of 7th India international refractories congress 2008, IREFCON - 2008, Kolkata. PP163-167. The paper deals with the rotary kiln application were the various factors leading to wear were quantified where possible , and refractories designed specially to give acceptable performance in each of the zones encountered in the kiln.
Panda B.K (2010): "Development of magnesia alumina zirconia bricks for lime kiln". IREFCON-2010, Pages 225-228, February 2010 at Kolkata. The paper is designed to slow or retard the reaction between the spinel and lime through the addition of zirconia in the form of an alumina -zirconia grain to the refractory mix. Zirconia reacts more readily with the lime in the refractory composition and surrounding environment to form calcium zirconate.
Jah R.K (2011): "Development of Silica Bricks with High Temperature Thermo-Mechanical Properties". Proceedings of International Conference on Coal and Coke, 7-8 April 2011, Jamshedpur, Page 71-76. 30
The paper includes the influence of all the main thermal and physical properties of silica refractory bricks within a finite element formulation to evaluate the temperature and thermally induced strain distributions in a crosssection of a coke oven wall.
2.2.2: International:
Manfred Koltermann (1979):"Andalusite Bricks for Torpedo Ladles", Steelmaking Conference Proceedings.1979.Vol.62. 241~245 at USA. The results revealed that the sintering property of the refractory sample without added alumina was better than that of one with added alumina, whereas the effect of a selected sample of added alumina on the sintering property of the high-purity andalusite based refractory was related to the purity and activity of the added alumina sample.
Nakayama J., H. Abe H.(1980): "Crack Stability in the Work-of-Fracture Test: Refractory Applications".Journal of the American Ceramic Society, Vol. 64, No. 11 (1980) 673
The conditions necessary to achieve valid work-of-fracture tests were examined for several alumino silicate refractories. On the basis of an energy balance, construction of a test stability diagram permitted evaluation of the effects of refractory properties, specimen dimensions, and the testing machine characteristics to determine the optimum test conditions. The results illustrate the important experimental features necessary to achieve stable work-offracture measurements.
C.R. Kennedy C.R (1981), "Alkali Attack on a Mullite Refractory in the 31
Grand Forks Energy. Technology Center Slagging Gasifier", American Society for Metals, Volume 3(1981). The study based on the mullite refractory lining in the Grand Forks Energy Technology Center to avoid slagging gasifier cracking and spalling after intermittent exposure to the coal-gasification atmosphere for a total of only about 125 hours at a hot-face temperature of 1800 +/- 400 F (1000 +/- 200 C). The mullite refractory apparently reacted with a sodium compound (probably NaOH) to form carnegieite and beta-alumina. The failure resulted from the volume expansion associated with this reaction. This study indicates that a dense magnesium-aluminate spinel refractory should be significantly superior to mullite in resistance to alkali attack.
SUN Gengeheng; Zhong Xiangcong (1988) : (Luoyang Institute of Refractories Research); “High Temperature Mechanical Properties of Al2 O3SiO2 System Refractories”, 1988-04 at China. This chapter discusses methods of growing refractory oxide single crystals and synthesis of refractory glasses by skull melting technique in a cold crucible. It shows the advantages of radiofrequency (RF) heating of dielectric materials in a cold crucible and points out some specific problems regarding the process of growing crystals by directional crystallization from the melt and by pulling on a seed from the melt. The distinctive features of the method of directional crystallization from the melt are discussed in detail on the example of technology of materials based on zirconia, i.e., cubic single crystals and partly stabilized single crystals.
Takeuchi K. (1990) :History of refractory Bricks. Uchida Rokakuho, 1990 The historical transitions and progress since the ancient times in refractory 32
technology for iron and steelmaking is briefly reviewed. In addition to describing the core historical facts for each era and their features , some features ,some discussions on the history from specified viewpoints such as raw material resources , energy, ecological aspects, refractory-manufacturing and R & D methodology are attempted.
Kriechbaum, G.W.; Gnauck, V.; Routschk, G. (1994): "The Influence of SiO2 and Spinel on the Hot Properties of High Alumina Low Cement Castables", 37. International Colloquium on Refractories, Aachen, 1994,150155. The paper discusses the difference in the formulation concepts of aluminaspinel (spinel containing) and alumina-magnesia (spinel forming) castables and the influence on their physical properties. The individual property profile will be discussed with regard to the requirements on refractory lining materials for the different zones of a steel ladle.
Kriechbaum, G.W.; Gnauck, V.; Laurich,J.; Stinnessen, I.; Routschka, G.(1996): " The Matrix Advantage System, a New Approach to Low Moisture LC Self leveling Alumina and Alumina Spinel Castables", Proc. 39. International Colloquium on Refractories, Aachen, 1996, 211-218. It has been described that Matrix advantage system is also suitable for vibration castables. The following properties even a higher hot strength and lower porosity can be achieved than that of self leveling castables. Van Garsel, D.; Gnauck, V.; Kriechbaum, G.W.; Stinneßen, I.; Swansinger, T.G.; Routschka, G.(1998): "New Insulating Raw Material for High Temperature Applications", Proc. 41. International Colloquium on Refractories Aachen (1998), 122-128. A new refractory insulating aggregate for high temperature applications has 33
been developed. The product contains approximately 92 % Al2O3 and 7.5 % CaO; its mineralogical composition is calcium hexaluminate. The product is a homogeneous material with a high porosity of typically 75 % and a small pore radius of 0.5-2.5 mu m. The product is produced by a process which includes hydrothermal hardening in an autoclave. Laurich, J.O.; Buhr, A.(1999): "Synthetic Alumina Raw Materials - Key Elements for Refractory Innovations", UNITECR`99 Proc., Berlin, 1999, 348-355 The paper deals with how the synthetic alumina raw materials enable the development of new refractories for the applications in steel industry. Some of the new developments are castables refractories and self flowing castables.
Mosser, J.; Karhut, G.(2000): "Refractories at the Turn of the Millenium", IRE Journal, January2000, 29-35. This paper describes how Almatis as a global supplier of premium alumina raw materials supports customers in the refractory industry to enhance their business in a more and more globalised business environment. In addition, key trends in the steel and the refractory industry are discussed. Finally, the Almatis global product concept is introduced.
Briggs, J.(2004): "European and International Refractories Industry - A Market / Technology Report", Materials Technology Publications 2004, ISBN 1 871677 49 1. It is an in-depth study of the current position and future prospects for the refractories
industry,
providing
comprehensive
data
on
production,
consumption, imports/exports, growth rates, etc. for both Europe and the main geographic areas outside Europe: USA, China, India, Japan, Brazil, etc. Information concerning the activities of key multinational and European34
based refractories companies is also provided. In addition, the raw materials supply sector and the impact that developments in refractory materials are having on the market are analysed in detail, as are the end-user industries that consume refractories. The paper also provides detail report that Europe is selfsufficient in only a few refractory raw materials, so there is a substantial requirement for imports of key materials. China has been a major supplier of many relatively inexpensive refractory raw materials. However, increasing demand from China's own end-user industries has restricted exports of several important refractory raw materials. This situation has led to shortages in some cases and consequent price increases. Increasing oil prices have also negatively impacted prices for raw materials.
Brown, W.K.(2004): " The Future of the North American Refractory Industry", Refractories Applications and News, Vol. 9, No. 2, March/April 2004, 5+36. The paper deals with a number of factors influencing the future prospects for the refractories industry like -firstly financial health of the US and Canadian steel industry, the largest consumer of refractories in North America, secondly general economic decline of the non-steel manufacturing sector over the last five years, thirdly the globalization of the customer base and finally the imported refractories.
Li, T.(2005): "Present Situation of Refractories for Bao Steel", CRU 11th World Steel Conference, 6-8 March 2005, Luxembourg. The paper reviews the present situation of refractories for Baosteel, including refractories for iron-making system, converters, ladles and tundishes. Descriptions have also been conducted on the environment protection and reutilization of refractories in Baosteel, together with some suggestions for 35
refractories suppliers to meet the advancement in iron and steel making technology of Baosteel. Semler C.E(2010), U.S. Consultant., research paper based on -"the ongoing advancement of refractories technology " at the 8th India International Refractories Congress (IREFCON'10) was held on February 4-6, 2010, at the Taj Bengal Hotel in Kolkata (Calcutta), India . The study includes the historical review of selected examples of refractory development and know-how from the 1500's to 2010. The paper illustrates few examples of actual refractory service improvements which have significantly benefited steel companies, as follows: Slide gates (Japan) +30%,BOF converter lining life (Japan) +65%,Iron ladle lining life (U.S.) +100%,Steel ladle lining life (U.S.) +136%,Torpedo car lining life (Japan) +490%. 2.3 Conclusion: After having a minute review of the published and unpublished literatures on refractories available nationally and internationally, it can be very well deduced that the available literatures focus more on different technical aspects of raw materials , operational aspect of the process of production, application aspect of research and development and maintenance of standardization aspect of quality. Literature on marketing mix of refractory products, market demand for refractories, launching of new refractory products, Management Information System(MIS), consumer behaviour, international marketing rules and regulations are still scanty. Much is yet to be done. Hence an effort has been made by the researcher to identify the gap still persists and to throw light especially on the marketing aspects of refractory products for the greater interest of the people associated with refractory industries directly and for the diverged interest of the academicians and researchers associated with the same indirectly. 36
CHAPTER-3 3. REFRACTORY INDUSTRIES- A CONCEPTUAL FRAMEWORK 3.1 REFRACTORY -WHAT AND WHY? "Refractory" items according to any standard english dictionary are materials which are hard to work with and are especially resistant to heat and pressure. In practical terms, refractory are products used for high temperature insulation and erosion or corrosion and are made mainly from non-metallic minerals. They are so processed that they become resistant to the corrosive and erosive action of hot gases, liquids and solids at high temperatures, in various types of kilns
and
furnaces.
Modern refractory production is largely a replication of this process of forming naturally-occurring (or synthetic) non-metallic mineral oxides (and non-oxides like carbides or nitrides) under the bonding conditions of high heat
and
pressure.
As refractory products are always resistant to heat, erosion and corrosion, they are typically used in any process involving heat and corrosion such as in kilns and furnaces. According to the main chemical component, i.e. fire clay, magnesia, zirconia is commonly known as alumino-silicate or acid refractory, basic
refractory
and
neutral
refractory-products.
In physical characteristics, refractory products have typically high bulk density, high softening point and high crushing strength. They are produced as standard
brick
shapes
and
unshaped
like
monolithic
products.
The principal applications of refractory are in industries like iron and steel , cement, glass, non-ferrous metals, petro-chemicals, fertilizer, chemicals, ceramics and thermal power-stations.12 12. Chattopadhyay A.K.,2005, "Application of refractory products in DRI,http://www.irma.org.in/refractory
37
3.2 IMPORTANCE OF THE REFRACTORY INDUSTRIES Boom in the user industries may see a boom in the refractory sector. Any user industries cannot manufacture finished products without application of refractory products. Therefore, the Indian refractory manufacturers are gradually focusing their efforts on the operational requirement of the user industries to optimize the refractory lining life. Indian Refractory industries are going through an exciting and complex phase. As on the one hand, refractory makers have been adding capacities with the hope that demand from the user industries will rise at a faster pace and on the other hand, none of the major announced new projects like Posco (the Pohang Iron and Steel Company), Arcelor Mittal, Sterlite Iron & Steel Co Ltd, Aditya Aluminium Ltd, Welspun Power & Steel Ltd, Bhusan Steel & Strips Ltd, Uttam Galve Steels Ltd, Jindal India Thermal Power Ltd etc in Orissa have been set up , it’s still on paper 13. The Indian refractory market is growing at an 8-10% per annum and in 2011 pegged at Rs. 4,500 crore14. About 20 years ago consumption of refractory per ton of steel was 30kg and now has come down to 7-8kg in the more efficient steel plants due to significant innovations in refractory material and technology. The industry is expected to grow with the growth of the country's economy and the Indian government's continued attention to infrastructure development. The steel industry, which is the single largest user of refractory, is likely to grow up to 150 million tons by 2015. The cement and aluminum industries are also expected to grow exponentially15. 13. Roy, A.S., "Refractory industry hard pressed for inputs", Business Line, May 7, 2008.http://www.thehindubusinessline.com/2008/05/07/stories/2008050752461000.htm. Accessed on May 16, 2008. 14. Http://www.metalworld.co.in/newsletter/aug11/focus0811.pdf. Accessed on Aug 08, 2011 15."Refractory industry in a limbo amidst steel boom, Feb 18, 2008. http:// www.mjunction.in/market_news/metals/refractory_industry_in_a_limbo.php. Accessed on March 15, 2008.
38
The use of refractory in steel production can bring about a huge reduction in the production cost through the improvement of refractory linings in blast furnaces and steel converters, and development of new processes that reduce the number of production steps. Aggregate production capacity of refractory in December 2006 was 20 lakh per annum, it has gone up by about 5-10% in 2007; whereas capacity utilization was 11.5-12 lakh tons per annum which was around 60 percent16 . By 2010, with an increase in the steel production, the demand for refractory has touched 12 lakh tons per annum17. . Table 5 WORLD CEMENT DEMAND WORLD
CEMENT
DEMAND
(million metric tons) % Annual Growth Item
2000
2005
2010
2005/00
2010/05
Cement Demand
1630.0
2250.0
2830.0
6.7
4.7
North America
149.6
170.0
196.0
2.6
2.9
Western Europe
197.7
208.0
236.0
1.1
2.2
Asia/Pacific
954.5
1500.0
1900.0
9.0
5.2
Other regions
328.2
405.0
500.0
4.1
4.7
Sources: World Cement Forecasts to 2000 to 2010,published by free-press-release.com,Mumbai,2010
Table 5 depicts that the global demand for cement has increased to 2.8 billion metric tons in 2010 with an annual growth of 4.7 percent annually. Whereas in 2005 global demand for cement decreased to 2.2 billion metric tons incomparision to 2010 due to economic recession impact of high interest rates . 16. http://www.blonnet.com/2008/02/08/stories/2008020850992300.htm. Accessed Feb 25, 2007. 17."Refractory industry in a limbo amidst steel boom, Feb 18, www.mjunction.in/market_news/metals/refractory_industry_in_a_limbo.php. Accessed on March 15, 2008.
2008.
http://
39
Asia/Pacific region includes China, majoring the largest market for cement in the world, has registered the biggest gains in terms of the total amount of cement sold. Other developing parts of the Asia/Pacific region and Eastern Europe, as well as number of nations in the Africa/Mideast and Latin America regions, recorded above-average cement market gains, fueled by a robust construction projects. Vietnam, Thailand, Ukraine, Turkey and Indonesia recorded the strongest increase in percentage terms.
Market advances scenario will be less robust in the developed areas of the US, Japan and Western Europe, with maintenance and repair construction accounted to the growth in cement demand through 2010. However construction expenditure in Germany and Japan following an extended period of decline will help to bolster overall developed world market growth. Fig 1 Refractory export from India-category wise
Sources:www.irma.org.in As a result, the refractory industries are currently expanded to cater the rising demand from the user industry across the border. The Fig 1. depicts the export of refractory products from India category-wise. India exports around 10 per 40
cent of its production to the tune of 1 million tons primarily to European Union, West Asia, South Africa and Far East including Malaysia and Indonesia. India exported quality refractory products to the tune of Rs 452 crore during 2007-08. Firebricks (Mag-Carbon) export demand has been dominated by high alumina bricks in the overseas market due to the better service life. Though the cost of high alumina bricks is higher than the silica bricks, it becomes cost effective in comparison to its performance. Refractory consumption per ton of steel have decreased with basic and monolithics products, which is indeed cost effective for the steel industry. Basic and monolithic products slowly grapping the export market. Indian refractory industries recorded a overseas demand of products in 2006-07, the exports of Indian refractory was Rs. 341 Crore18. 3.3 HISTORY OF THE REFRACTORY DEVELOPMENT IN INDIA. 3.3.1 RECENT MILESTONES IN REFRACTORIES DEVELOPMENT India has an ancient history of ‘Potter's Wheel' which has, although remote, a definite link with the usage of refractory. India is producing and supplying almost all type of refractories equivalent to the International standard and quality. One such list of major developments which has taken place in the field of refractories in India is represented chronological hereunder:
18. http://www.irmaindia.org/serv.html. Accessed March 12, 2008.
41
Table 6 Milestones in the development of refractories in India. Year
Development
Purpose
1874
Fire clay Bricks
Application
for
blast
furnace lining 1941
Magnesite Bricks
Application
for
BOF(basic
oxygen
furnace) 1949
Silica Bricks
Application
for
coke
for
glass
for
Coke
oven 1955
Sillimanit Bricks
Application industries
1949
Coke Oven Silica Bricks
Application oven
1955
1960
Bauxite based High AluminaApplication for steel and Bricks
cement industries
Mullite bricks
Application
for
glass
for
steel
for
steel
industries 1969
High Grog Fire clay Bricks
Application ladles
1977
AZS Electrocast Blocks
1983
Magnesia Carbon Refractory
Application ladles
1983
Magnesia Slide Gate plates
Application
for
CC(continuous casting) 1984
High Alumina Slide Gate Plates Application
for
CC(continuous casting) 42
1985
CementApplications for industry
Low castables/monolithics
including the steel, iron and
steel
foundries,
aluminum furnaces and other non-ferrous metals, rotary kilns 1985
Ceramics fibres
Application
for
high
temperature insulation 1985
High alumina bauxite based ladleApplication for ladle refractory
1986
BRN 62 blast furnace hearthApplication for BF(blast blocks
1986
1988
furnace)
Bubble alumina based insulatingApplication for hot face blocks
kiln linings
Dense Silica shapes
Application
tall
coke
ovens 1990
Direct
bonded
mag-chrome Application for copper,
bricks 1990
Unidirectional
glass and zinc furnaces gas
elements
purgingApplication
for
LRF(Ladle
Refining
Furnaces) 1990
Alumina carbon torpedo ladleApplication for ladle bricks
1990
Slide gate refractory
Application
for
CC(continuous casting)
43
1991
Dense silica shapes
Application for BF(blast furnace) and stoves
1993
1993
Alumina
carbon
continuousApplicable for kilns or
casting refractory
furnaces
Mullite bricks
Application for BF(blast furnace) and stoves
1993
Dry basic ramming mass
Application for furnace and stoves
1993
Gunning materials
Application
for
converters 1993
Spraying mass
1994
Ultra
low
Application for tundish cement
castablesApplication for tundish
/monolithics 1994
Pitch-bonded tempered dolomiteApplication bricks
1994
1995
1995
kiln
for
ladle
spraying
Alumina carbon silicon carbideApplication for BF(Blast blast furnace trough mass
1998
for
furniture
Spinel based ladle monolithicApplication lining
rotary
kilns
Cordierite and silicon carbideApplication based kiln furniture
in
furnance)
Magnesia alumina zirconia bricks Application for cement industry
1998
Alumina zirconia slide gate and CC(continuous casting) refractory 44
1998
Pumpable refractory
Application
for
petrochemical industries. Source: : http://www.irma.org.in/refractory/milestones.html
3.4 GLOBAL AND REGIONAL DEMAND FOR REFRACTORY MATERIALS
The global demand for refractory materials, along with major regions, is illustrated in Table 7. The most salient feature in the table is the steep decline in the rate of growth of demand of refractories from over 10.8 percent per year during 2002-07 to 3.5 percent in tonnage during the period 2007-12 . If the same trend continues, we may not see any improvement in the growth rate for world refractory demand by 2017, either in value or in tonnage terms.
Table 7. World Refractory Demand by Major Regions % Annual Growth
Item
2002
2007
2012
2007/2002
2012/2007
World
22,865
38,100
45,200
10.8
3.5
3,585
3,725
3,750
0.8
0.1
refractory demand (000 metric tons) North America 45
Western
3,645
3,695
3,700
0.3
0.0
Asia-Pacific
10,325
24,635
31,015
19.0
4.7
Latin
910
995
1,125
1.8
2.5
3,130
3,565
3,920
2.6
1.9
1,270
1,485
1,690
3.2
2.6
Europe
America Eastern Europe AfricaMideast Source: The Freedonia Group,2012 In 2007 North America tied for second place in refractory tonnage demand along with Western Europe, after Asia-Pacific with almost 80 percent of the total. Ongoing price pressures and additional investment in overseas factories by companies headquartered in North America will limit increase in regional sales. Major end user sectors like steel, cement, flat glass manufacturers etc. are turning to advanced manufacturing and utilizing more costly materials, such as preformed shapes and nonclay monolithics. However, it is the fact that North American region is still a large one. In Western Europe, mature, industrialized nations have been experiencing anemic economic growth. As for refractory demand, it has been stagnant over the past decade, despite gains in key markets such as steel. The region is among the most efficient user of refractories;
the
amount
used
per
ton
of
steel
has
declined.
In Asia-Pacific, the dominant player is China and it is the largest global producer and consumer of refractory products. Its domestic refractory market is formidable at a value of $9 billion in 2007 and keeps on expanding as steel, 46
cement, and glass production rise because of infusion of both capital funds and technology from domestic and foreign sources. China is the dominant supplier of raw materials to the world refractory industry but is now emphasizing on finished refractory products. The Chinese refractory industry is highly fragmented, so some consolidation is likely in the current decade. Japan is the second largest market in the region for refractory products, but such goods come at a high price, reflecting high wages, energy costs, and lack of many raw materials. Refractory demand is projected to decline, albeit at a slow rate in tonnage terms, though not value-wise. India ranks third behind China and Japan in the region in refractory use and experienced a 10 percent annual increase in value terms in the 2002-07 period. Rapid growth in steelmaking should stimulate India's refractory usage in the current decade. In other regions, the situation is mixed, with Latin America showing higher growth rates for 2007-12 than was the case for 2002-07, whereas Eastern Europe and Africa-Mideast are showing a slowdown as seen in the data of Table 21. Latin America was the smallest regional market for refractories at about 3 percent of the world total in 2007; but as of late, there is a renewed strength in steelmaking. Brazil is the largest producer, accounting for 75 percent of the region's total output. Latin American refractory capacity will remain quite modest by world standards and the competition from foreign suppliers
is
intense.
The transition economies of Eastern Europe experienced much upheaval after 1989, but halted economic contraction resumed their growth after 1997. Despite numerous problems, nations in the region attracted much foreign capital for manufacturing facilities, and as a result refractory sales have shown solid gains since 1997. Demand is boosted by the fact that many local steel producers use less efficient open hearth furnaces; such units use more 47
refractory materials per ton of steel produced than the more modern basic oxygen and electric arc furnaces. Sales gains in the future will be supported by increases in manufacturing capacity in the steel and automotive sector. However, there will be competition from foreign suppliers who are attracted by the solid market outlook. Approximately 75 nations, the Africa-Mideast, find a challenging situation. There is considerable variation from industrialized nations to oil-based monarchies and impoverished countries. The region as a whole is economically developing, but is also indebted and heavily dependent on agriculture and natural resources. Refractory demand is put at about 4 percent of the world total. Overall intensity of product use is low by global standards. Encouraging signs include acceleration in manufacturing and strong annual increases in steel production.
3.5 PRODUCTION PROCESS, INPUTS AND OUTPUTS
Manufacturing of Refractory depends on particular combination of chemical compounds and minerals used to produce a specified level of thermal stability, corrosion resistance, thermal expansion, and other qualities. It involves four processes: raw material processing, forming, firing, and finally processed. Mixed process, deals with raw materials are crushed into desired shapes. This process typically occurs under moist or wet conditions. After the refractory is formed, the material is fired. Firing involves the heating of
refractory
material to high temperatures in a periodic batch or continuous tunnel kiln to form a ceramic bond. This process gives the raw materials their refractory properties. The final processed stage includes milling, grinding, and sandblasting the finished product. Finally finished products are impregnated with tar and pitch followed by product packaging19. 19. The Technical Association of Refractory, Japan. 1998. Refractory Handbook. Tokyo: The Technical Association of Refractory, Japan.
48
Figure 2. Specific production processes for various refractory products
Sources:Refractory Handbook. Tokyo: The Technical Association of Refractory, Japan,1998
3.5.1 MACHINES USED IN THE PRODUCTION PROCESS Several types of machines are used to produce refractory: mixing/kneading machines, presses, and kilns. 49
Mixing/Kneading Machines Figure 3 (vide page 52) illustrates the different types of machines used to mix or knead refractory products. There are two types of mixing and kneading machines: fixed vessel and driven vessel. Mixing homogenizes more than two types of bulk materials, and kneading machines make a uniform coating layer. Mixing and kneading machines are equipped with mixing blades or muller wheels. Heating, cooling, or de-airing equipment may also be applied to the vessel. Mixing and kneading machines are used for manufacturing shaped and unshaped refractory. Unshaped refractory, however, are not processed any further20 .
Presses Refractory pressing machines are broadly categorized into three groups: impact and static press, vibrating press, and cold isostatic press. Choosing among the three groups of presses largely depends on the type of raw materials used. Impact and Static Presses: Figure 3.1(Vide Page 53 ) illustrates a vacuum press. Figure 3.2 (Vide Page 53 ) is a diagram of a hydraulic screw press, a type of static press. Impact and static presses are typically equipped with a vacuum degasifier. Impact presses have a higher allowable maximum compacting force than static presses.
20. Refractory Handbook. Tokyo: The Technical Association of Refractory, Japan,1998.
50
However, static presses are used in the production of sophisticated refractory such as submerged nozzles and shrouds. Bricks formed with static presses are flat, uniform and compact.
Vibrating Press: Vibrating presses, shown in Figure 3.3(Vide Page. 53 ), are classified into two types: air cylinder type and hydraulic cylinder. The vibrator in the air cylinder type is attached to a table, and the air cylinder compacts the material. The hydraulic vibrating press is constructed with the hydraulic pulse generator attached to the pressure block, and the hydraulic cylinder compacts the material. Vibrating presses are typically used for the compaction of complexly shaped refractory.
Cold Isostatic Press (CIP): A CIP, illustrated in Figure 3.4(Vide Page 53 ), is a molding device that provides homogeneous hydrostatic pressure over the entire surface of a rubber mold filled with powder. This method, also referred to as a hydrostatic press or a rubber press method is a material processing technique in which high fluid pressure is applied to a powder part at ambient temperature to compact it into a predetermined shape. The power part is consolidated into a dense compacted shape. Water or oil is usually used as the presser medium.
51
Figure 3 Machines used to mix or knead refractory products
52
Fig 3.1 Vacuum Press
Fig 3.2 Friction Press (A) and Hydraulic Screw Press (B)
Fig 3.3.Vibrating press
Fig 3.4.Cross section of Cold Isosatic PressCIP
CIPs are based on the wet bag method, where the mold is placed in pressurized liquid, or the dry bag method, in which the mold does not touch the pressurized liquid. High pressurized molding provides uniform density, which leads to a reduction of internal stresses, eliminates cracks, strains and laminations, the ability to make complex shapes, and to press more than one shape at the same time . 53
Kilns Refractories are fired to develop the materials' refractory properties. The unfired ("green") refractory passes through a heat treatment, which results in a thermally stable refractory and or crystallization. The industry uses three types of kilns:
Tunnel Kiln: In a tunnel kiln, refractory products consecutively pass through preheating, firing, and cooling zones (vide Figure 4). The combustion gas from the firing zone is typically used to preheat the refractory. Heat can be recovered from cooling fired refractory and reused as combustion air. Approximately 80 percent of shaped refractories are fired in tunnel kilns.
Round Periodic Kilns: Round periodic kilns are typically used to fire silica bricks. Figure 5(Vide Page 57 ) is a diagram of a round periodic kiln. Kilns can be used to fire large refractory products that cannot be fired in a tunnel kiln and can easily accommodate changes in production. Shuttle Kilns: As illustrated in Figure 6(Vide Page 57 ) , the design of a shuttle kiln resembles the firing zone of a tunnel kiln. Shuttle kilns effectively store heat and are used to fire fireclay and specialty bricks.21
21.The Technical Association of Refractory, Japan. 1998. Refractory Handbook. Tokyo: The Technical Association of Refractory, Japan
54
Fig 4. Types of tunnel kiln Fig 4.1 Indirect Flame System
55
.Fig 4.2 Top Combustion System
Fig 4.3 Side Combustion System
56
Fig 5 Round Kiln Downraft
Fig 6. Shuttle Kiln
3.6 TYPES OF REFRACTORIES MANUFACTURED IN INDIA. Refractories are manufactured in two forms-shaped objects and unshaped objects. Unshaped refractory comes in granulated or plastic compositions. Briefly described here, are shaped and unshaped refractory which are the two broad categories of refractory.
57
Shaped Refractory Shaped refractory include bricks, shapes, crucibles, and monolithics. Shaped refractories are pre-fired to exhibit their ceramic characteristics. Table 8 below lists each type of shaped refractory and a brief description of its use. Unshaped Refractory The unshaped products include mortars, gunning mixes, castables (refractory concrete), ramming mixes, and plastics. The manufacture of unshaped refractories differs slightly from shaped refractory. Unshaped refractories typically do not go through a firing process until reaches the final consumer. These are installed by spraying, casting, molding, or ramming. Table 8 below lists each type of refractory and a description of its use.
Table 8. Types and Descriptions of Refractory Produced
Kind
Definition
Shaped refractory Bricks
Refractories that have shapes and are used to line furnaces, kilns, glass tanks, incinerators, etc.
Insulating firebrick
Low thermal conductivity firebrick.
Unshaped refractory (Monolithic) Mortar
Materials for bonding bricks in a lining. The three types of mortar-heat-setting, air-setting,
and
hydraulic-setting-
have different setting mechanisms. 58
Castables
Refractories for which raw materials and hydraulic-setting cement are mixed. They are formed by casting and used to line furnaces, kilns, etc.
Plastics
Refractories in which raw materials and plastic materials are mixed with water. Plastic refractories are roughly formed, sometimes with chemical additives.
Gunning mixes
Refractory that is sprayed on the surface by a gun.
Ramming mixes
Granular
refractories
that
are
strengthened by gunning formulation of a ceramic bond after heating. Ramming mixes have less plasticity and are installed by an air rammer. Slinger mixes
Refractory installed by a slinger machine
Patching materials/
Refractory with properties similar to
coating materials
refractory mortar. However, patching materials have controlled grain size for easy patching or coating.
Lightweight castables
Refractory
in
which
porous
lightweight materials and hydraulic cement are mixed. They are mixed with water and formed
by
casting.
Lightweight 59
castables are used to line furnaces, kilns, etc.
Fibrous Materials Ceramic fiber
Man-made
fibrous
refractory
materials: there are several different types of ceramic fiber, including blanket, module, vacuum form, rope, loose fiber, etc. Source: Refractory Handbook. Tokyo: The Technical Association of Refractory, Japan,1998.
Special Products :
In continuous casting, Garnex boards of silica/magnesite for cold tundishes are used to facilitate sequencing of heats. Various flow control devices such as baffles / dams / weirs made of magnesite are used in tundishes for improved quality of the steel. Submerged entry nozzles used between tundish outlet and mold are made of alumina-carbon/ magnesia-zirconia refractory. Shrouds and monoblock stoppers made of alumina-carbon/alumina-zirconia are used in tundishes of various bloom/slab/billet casting machines. 95%zirconia metering nozzles are used for flow of steel into mold of billet continuous casting machines for excellent erosion resistance. Also, for eliminating nonmetallic inclusions thus improving the steel quality, ceramic filters in tundishes have evolved recently. Prefabricated single block launders of high alumina with SiC, Cr2O3 are used in EAFS to minimize lip jam formation, improved hot load characteristics 60
with resistance to slag and thermal shock. Ceramic fibres due to their insulating nature are used in r e h e a t i n g f u r n a c e s , b l a s t system/stoves of blast furnace etc. High magnesia porous plug is another area which involves inert gas purging for homogenization of steel with regard to temperature and composition.22 Emissions and Controls in Refractory Manufacturing. Refractory production leads to emissions of organic particulate matter (PM); metals; and gaseous pollutants, including sulfur dioxide (SO2), nitrogen oxides (NOx), carbon monoxide (CO), carbon dioxide (CO2), fluorides, and volatile organic compounds (VOCs)
23
.
PM and Metals Emissions PM and metal emissions occur during the crushing, grinding, calcining, and drying of the raw materials; the drying and firing of unfired refractory bricks and tar and pitch operations; and finishing of the refractory. Emissions from crushing and grinding are readily controlled with fabric filters. Product recovery cyclones and wet scrubbers are used on calciners and dryers to reduce PM emissions.
Gaseous and VOC Emissions SO2, NOx, CO, CO2 are produced along with refractory products. The source of most of the SO2 emissions is the fuel used to fire the kiln and dryers. The composition of the clays and plaster added to refractory and the amount of refractory produced affect the amount of SO2 produced. VOCs emitted from tar and pitch operations are controlled by incineration. 22.Steelworld , june 2006, pp-10-13, published by Institute of Materials, Minerals and Minings,Mumbai. 23. Lisa corner, 2001,Refractory Manufacturing NESHAP: Industry Profile, Methodology, and Economic Impact Analysis, March 2001
61
Inputs The inputs in the production process for refractory include general inputs, such as labor, capital, and water. The inputs specific to this industry are the type of fuel and the clay or other alumina and nonclay material used. The two specific inputs are discussed below:
Clays Clay is composed mainly of fine particles of hydrous aluminum silicates and other minerals that is plastic when moist but hard when fired. Table 8, lists the different types of clays used in refractory products and their characteristics. Fireclay is the predominate clay used in firebrick; bentonite, in foundry sand; common clay, in refractory mortar and cement; and kaolin, in calcine, grog, high alumina brick, kiln furniture, and plug, tap, and wad 24.
Nonclays Nonclay refractories are composed for alumina, mullite, chromite, magnesite, silica, silicon carbide, zircon, and other nonclays. Table 9, (Vide Page 63 ) lists the various minerals used in the production of nonclay refractory, the type of refractory produced, and characteristics of the refractory.
24.Virta, Robert L. 1998. Minerals Information: Clay and Shale. Reston, VA: U.S. Department of the Interior, U.S. Geological Survey. Available at .
62
Table 9. Types and Characteristics of Raw Materials used in Refractory Manufacture Type
Sources; Refractory Handbook. Tokyo: The Technical Association of Refractory, Japan,1998.
63
REFRACTORY CHARACTERISTICS: The quality and characteristics of refractory vary considerably. Therefore consumers often employ chemical and physical tests to ensure that the refractory purchased should meet their requirements. The American Society for Testing and Materials (ASTM) provides specifications and tests for various kinds and uses of refractory products. Depending on the intended end use, consumers may test refractory for thermal conductivity, resistance to abrasion and corrosion, permeability, oxidation resistance, and other characteristics25.
Most refractory products are sold as preformed shapes. However, they are also available in special purpose clays; bonding mortars; and monolithic, plastic refractory; ramming mixes; and gunning mixes. A variety of processed refractory grains and powders are also produced 26. From the physical form, refractory products can be further classified into oxide bricks, nonoxide bricks, and composites. Table 9(Vide Page ), lists the types of oxide, nonoxide, and composite refractory; their characteristics; and their applications.
25.ASM International. 1987. Engineered Materials Handbook. Volume 4: Ceramics an Glasses. Metals Park, OH: ASN International 26. DHAN, C.J. KASHANI.A. 1999. "Industry Report: Refractory Passing through Difficult Times." Available at .
64
Table 10. Characteristics and Types of Refractory
65
Table 10. Characteristics and Types of Refractory continued..
66
3.7 REFRACTORY PRODUCTION Figures 7.1. Refractory production in India -firebricks(2002-2009)
Source:www.irmaindia.org Figure 7.1 Firebricks refractory production have taken nice pick from 200102 to 2004-05 due its monopolistic market but gradual fall in the production from 2004-05 to 2005-06 was due to the better performance of monolithic as substitute for firebricks by the user industries. 27.steelworld , published by steelworld's publisher, Mumbai,2009, PP19
67
Figures 7.2. illustrates the refractory production in India-High Alumina (2002-2009)
Figure 7.2 The demand for High alumina refractory increased instantly from 2002-03 to 2003-04 especially due to growth of sponge iron industries in India. And during 2007-08 to 2008-09, there was drastic fall in the production because of the recession in the market. Figures 7.3 illustrates the refractory production in India – Silica (20022009)
68
Fig 7.3 reflects the production trend for silica refractory which had declined on every alternative year like 2002-03, 2004-05 and 2006-07 due to shift in the consumption of high-value and better performance based high alumina refractory. The trend has gone up in 2007-08 and 2008-09 because of the application of silica refractory in the glass industry.
Figures 7.4. Refractory production in India-Basic (2002-2009)
69
Figure 7.4 (Page Vide 69) illustrates the production of basic bricks which have remained stagnated from 2002-03 to till 2005-06 due to the import of low price basic refractories that are available from China. The demand increased again in 2006-07 because of the development of steel industry and from 200708 to 2008-09 the demand gradually decreased due to impact of recession in the world market.
Figure 7.5. Refractory production in India-Speciality (2002-2009)
Source:www.irmaindia.org
70
Figure 7.5 (Vide Page 70) illustrates the production of speciality products with a constant growth from 2004-05 till 2007-08, due to the growing demand in export market. Indian established players eg. IRL, Vesuvius India and Orind Abrasive Ltd have marked their presence through the export of
purity,
consistency , better resistance to temperatures and per ton realization refractory solution for the user industries. In 2008-09, production trend remain stagnate due to the impact of recession in the world market.
Figures 7.6 Refractory production in India -Monolithics(2002-2009)
Source:www.irmaindia.org
71
Monolithics has been increasing since 2005-06 due to demand in the coal fired DRI rotary kilns especially in the eastern parts, Orissa and Jharkhand. Monolithic is the best substitute where gas is not available. The LCC(low cement castables) monolithic solution is preferred for its ability to withstand the forces of wear and tear caused by the usage of low quality coal. Figure 7.6 above clearly indicates the sharp rise of castables production from 200506 to 2007-08 due to set up of new sponge iron industry 28.
3.8
TYPICAL
PRODUCT
SPECIFICATION
OF
INDIAN
REFRACTORY The refractory specifications are important parameters which play important role in the selection of products by the user industries. BIS (Bureau of Indian Standards) has prescribed specification standard for manufacturing of refractory products. The specification of application areas in the user industries has been depicted Vide Table No.11:
28. Chattapadaya, A.K, 2008, available on www.irmaindia.org
72
Table . 11.1 Refractories Specification -Blast Furnace Stack Lining
CCS: Cold crushing strength RUL: Refractory under load PLC: percentage of linear change B.D: Bulk Density A.P:Average Porosity
Table 11.2 Refractories Specification- Blast Furnace Bottom Lining
73
Table No 11.3 Refractories Specification- Blast Furnace Tap Hole
Table No 11.4 Refractories Specification- Blast Furnace trough
74
Table 11.5 Refractories Specification- Blast Furnace Stove Checker
Table 11.6 Refractories Specification- Ceramic Burner Blocks
Modulus of rupture (MOR)
75
Table 11.7 Refractories Specification- Coke Oven Silica
Reversible Thermal Expansion(RTE)
Table 11.8 Refractories Specification- Magnesite bricks
76
Table 11.9 Refractories Specification- Mag Carbon Bricks
Table 11.10 Refractories Specification- Magnesite Bricks for BOF/EAF
77
Table 11.11 Refractories Specification- Magnesite bricks for BOF/VAD/VOD Ladle
Table 11.12 Refractories Specification- Direct Bonded bricks for VOD/AOD
78
Table 11.13 Refractories Specification- Steel Ladle
Table 11.14 Refractories Specification- Slide Gate
79
Table 11.15 Refractories Specification- Electric Arc Furnace
Table 11.16 Refractories Specification- Continuous Casting
80
Table 11.17 Refractories Specification- Continuous Casting
Table 11.18 Refractories Specification- Re-Heating Furnace
81
Table 11.19 Refractories Specification- Induction Furnace
Table 11.20 Refractories Specification- Pouring
82
Table 11.21 Refractories Specification- Gas Purging
Table 11.22 Refractories Specification- Low Cement Castables
83
Table 11.23 Refractories Specification- Low Cement Castables
Table 11.24 Refractories Specification- Insulating Castables
84
Table 11.25 Refractories Specification- Insulating Bricks
Table 11.26 Refractories Specification- Ceramic Fibre
85
Table 11.27 Refractories Specification- SiC for Heat Treatment Furnaces
Table 11.28 Refractories Specification- High Alumina Castables
86
Table 11.29 Refractories Specification- Copper Industries
Table 11.30 Refractories Specification- Aluminium Industries
87
Table 11.31 Refractories Specification- Aluminium Industries
Sources:www.irmaindia.org
3.9 REFRACTORY FOR SOCIAL CAUSE : Application of refractory plays an important role in a developing society. The environmental aspects and their impact on steel plants have been the area of major concern for the refractory industries. To take care of the environment, refractory makers along with steel industry have made an immense progress to improve usage, reuse, recycle, to eliminate and waste of refractory in different areas of application, to reduce the emission of green house gases and to use eco-friendly materials during refractory manufacturing. OCL is doing a lot of research & work on the same line for taking care of environment in collaboration with Dalmia institute of scientific and industrial research (DISIR) . TISTRIA, a synergy group setup by Tata Refractory Ltd, Belpahar thrusts on research and development in the field of refractory. For effective co-ordination, TISTRIA is divided into three sub-groups-TISTRIA R&D, TISTRIA raw materials and TISTRIA quality and technical services. TISTRIA R &D is responsible for identifying the product requirements, 88
developing new products and improving the existing ones as per the need of the market. TISTRIA raw materials assess the requirements of quality raw materials, for the present and future use of the group and locate new sources for raw materials. Keeping with the Tata culture of quality, TISTRIA quality and technical services conduct field trails on new products before standardizing them. The rich experience harnessed within the group is available to all customers29. There has been remarkable progress in understanding the needs of our customers and going much beyond the conventional supplier-user relationship by providing synergetic advantage that can be gained by society at large from disciplines like construction, material science, and production technology coming together30.
4.0 STEADY PROGRESS IN THE REFRACTORY SECTOR IN INDIA 31
.
In India the first refractory manufacturing unit was set up at Raniganj in 1874 by Burn & Company Ltd (now Burn standard co. ltd, Kolkata) to cater to the needs of ordinance factory, railway workshops, Calcutta mint and Foundries. In 1907 with the set up of Tata Steel and Indian Iron & Steel Company the demand for refractory increased. As a result, several refractory manufacturing units like , Kumardhubi Fireclay & Silica works (KFS), Bihar firebricks, Reliance firebricks were set up. After the independence of India, a number of integrated steel plants like Hindustan Steel (now SAIL) at Durgapur, Bhilai and Rourkela were set up. Tata Steel also doubled its capacity with technological up-gradation. To meet their requirements Burn & Co. Ltd expanded their manufacturing capacity and set up more units in West Bengal, Bihar, MP and Tamil Nadu. 29.Internet sources:Available :http://www.ceram.com/refractory/iron-steel-industries.htm 30. Internet sources:Available:www.irmaindia.org 31. Internet sources:Available: http://viewforyou.blogspot.com/2008/10/indian-refractory-industry-is-more-than_1539.html
89
A number of small and medium refractory units came in and around Asansol Durgapur - Chirkunda - Dhanbad belt viz. Bihar Pottery at Rupnarainpur, National refractory at Salanpur, Hindustan refractory at Durgapur, India Refractory (later on Kesoram Refractory & now ORIND Bengal) at Kulti, Harry Refractory at Kalubathan, Maithan Ceramics and Valley Refractory at Chirkunda. During 50's several large scale refractory plants like, Belpahar refractory (now Tata Krosaki refractory Limited), Orissa Cement (now OCL India Ltd), Orissa industries (ORIND), ACC Refractory (Ace refractory ltd), India firebricks & insulation etc were setup with latest know how. During 70's, with setting up of Bokaro steel plant and modernization / expansion of major steel plants, the demand for refractory went up. A few more units under public sector like , Ipitata Refractory (now Nilachal refractory), Bharat refractory and private sector like, Raasi refractory Ltd, Indo Flogate (IRL) etc were setup.
Unfortunately with the change in steel technology and demand of better type of refractory by other industries, requirement of conventional refractory reduced considerably resulting in a closure of old Refractory units. At present, 120 refractory manufacturing units in the country are virtually scattered all over the country to take the advantage of sources of raw materials as well as the centers of consumption. Table 12 lists the refractory industries category wise.
Table 12. Refractory industry category-wise
Market
Large plants
Medium scale units Small scale units
65%
15%
20%
Share
90
No of major11 Players
24 Players
65 Players
players Players
• ACC(Associa
• Carborandum
• Ranchi
ted cement
universal, New
refractory,
companies -
Delhi
Jharkand
Mumbai), • Vesuvius India-
• Sharad
• Tata Krosaki
Kolkatta,
refractory-
Refractories
Maithan-
Jharkand
Ltd(formerly
Dhanbad,
known as TRL(Tata Refractory
• SKG refractory, Mumbai,
LtdBelpahar),
• VRW refractory,
• OCL(Orissa
Chennai,
cement LtdRajgangpur),
• Kesoram refractory,
• Orissa
Kolkatta,
industries Ltd-
• Sarvesh
Sundergarh,
refractory,
IRL-Kalunga
Rourkela.
91
a Manufacturer special Low tech bricks
Product
Provides
Range
comprehensive
conventional
range of products
refractory
Segments
Cater
to
variousFocus on two or three Sell
industries ex. steel, industries
locally-small
companies
cement and glass Presence
Global
and Domestic
Domestic Sources:
Indian
refractory
Global
and
Domestic industry
database,published
by
komal
publication,Gujarat, 2008
4.1 PERFORMANCE OF THE REFRACTORY IN INDIA IN THE LAST 25 YEARS Refractory production in India has increased over the years but not in proportion to the growth of production of the user industries. The fact can be explained by the decreasing trend in specific refractory consumption by major user industries. This has forced the Indian refractory makers to improve the refractory performance in respect to lining life. The average specific consumption of refractory in the steel industry is 12 to 13 kg per ton of steel. About 20 years ago, it was 30 kg for every ton of liquid steel. Leading players have achieved higher efficiency. Their average specific consumption has improved to around 7 to 8 kg per ton of crude steel. Given the current technology, the current benchmark of average specific consumption level of 7 to 8 kg per ton of crude steel will be achievable for a handful of good producers. For others, the average specific consumption level will come down 92
to around 10 to 10.5 kg per ton as against the current average of 12 to 13 kg per ton32. Figures 8.1 to 8.4 show a glance on the improved performance of the refractory with a new outlook for the user industries like , steel, copper and non-ferrous sector. Refractories are used in the different application areas like, BOF(basic oxygen furnace), BF(blast furnace) troughs, steel making ladles and slide gates of the user industries.
Fig 8.1
Fig 8.2
Source:www.irmaindia.org
32.Metalworld, published by metalworld's publication,Mumbai 2009: Aug 2009, pp-19
93
Fig 8.3
Fig 8.4
Source:www.irmaindia.org
4.2 SPARKLING FUTURE
The global steel industry has shown resilience to sustain investment in recent years. Capital expenditure by the industry surged between 2003 and 2008, but then fell back somewhat during the global financial crisis as cash flows weakened. However, steel companies survived the downturn sufficiently well that the financial constraints to making investment expenditures are not too severe. Sizeable investments are made, particularly in emerging economies, not only to modernise existing plants in order to reduce energy consumption, and produce high quality steels but also to build significant new capacities. In addition, there are heavy investments to integrate backwards particularly into iron ore, to benefit from the wide gap between the iron ore price and the cost 94
of producing this key raw material.
Global steel production increased from 1,185 million metric tons(mmt) in 2003 to 1,700 mmt in 2008 due to boom in the investment sector. In 20092010, capacity continued to increase to an estimated 1,893 mmt. Despite the current pull-back in investment, capital expenditure remains sufficiently high to contribute to annual capacity growth of 3-4% over the next two years, bringing global capacity to an expected 2,027 mmt by 2012 and leading to continued concern about growth in capacity that exceeds growth in demand33. During the early communist rule Chinese steel industry appeared to be staggering. However, it really is a concern, when one considers population of 1.3 billion, the per capita steel consumption is around or below that of the developed countries. China has progressively increased steel production for many years; it has also been importing substantial quantities of steel. China has become a net exporter of steel. This indirectly means that China has also reached a level of production saturation and to reserve steel production capabilities. Chinese Steel Industry needs to go abroad. India's economic development has entered into a stage when it is estimated that steel consumption in India will reach 200 million tons by 2020. The huge demand of the future is creating a scenario for Chinese Steel Companies to enter into Indian market. In 1978 China underwent rapid economic industrialization 34. China accounts 45.5% of world steel production in 201035 .
33.http://lcweb2.loc.gov/frd/cs/cntoc.html 34. chinabusinessreview.net 35.http://www.chinaknowledge.com/Business/CBGdetails.aspx?subchap=3&content=14
95
Amongst the other newly steel-producing countries, South Korea has stabilized at around 46-48 million tons, and Brazil at around 30 plus million tons. This brings the focus of the industry to India. Steel consumption of 300 kg per man per year to be a fair level of economic development, India will have to come up to somewhere around 300 million tons, if it is to fulfill its ambitions of being a developed country. That of course is a long journey for India to increase from the present production level of around 50 million tons. India was producing only around a million tons of steel at the time of its independence in 1947. By 1991, when the economy was opened up for steel production it grew to around 14 million tons.
Figure 9.1 (Vide Page 97) depicts global steel evolution which can be seen in four phases like recession, oil crisis, fall of Russia and Asian financial crisis. North American Free Trade Agreement (NAFTA) region showed a 35.8% decline in apparent steel use in 2009, and a positive 17.1% growth in 2010. Apparently, steel demand in the US has failed by 38.7% to 60 million tons in 2009 after falling by 8.2% in 2008. It has recovered to 72 million tons in 2010 with a growth rate of 18.8%.
96
Fig 9.1 Global steel industry demand
Global Steel Industry – crossed 1 billion milestone The evolution can be seen in four phases, and each phase separated by series of discontinuities Steel Production (Million Tonnes) 1,200 1,000
The Early Years
The 1st Surge
The 1st Plateau
The 2nd Surge
The 2nd Plateau
800 600 400 200
CAGR 7%
CAGR 2%
CAGR 5% WW 1
Great Depression
Oil Crisis
WW 2
0 1900
1910
1920
1930
1940
IRON ORE BASED
1950
1960
CAGR 5 %
CAGR 1%
1970
1980
Fall of USSR Asian Financial Crisis 1990
2000
2010 2020
SCRAP BASED
Source:www.ifglref.com CAGR: Compound Annual Growth Rate WW1: World War 1(1914-1920) WW2: World War 2(1942-1945)
The European Union (EU) member countries’ economies had also been significantly affected by the economic crisis and the region's apparent steel use fell by 32.6% in 2009 standing at 122 million tons which is equal to 32.6% in 2009. South Africa was ranked 21 out of 43 by the WSA(World steel association) in terms of global steel production in 2008 and is also Africa's largest steel producer, accounting for 48% of total steel production in the continent in the same year. The primary steel industry is a significant contributor to the South African economy and earns large amounts of foreign exchange. The South African Iron & Steel institute reports that total South 97
African steel production amounted to an estimated 8,176 Million tons in 2008, down by 9% compared with the 8,986 Mil tones produced in 2007, representing about 0.6% of world production. About 5.5 Million tones are consumed
domestically.
South Africa is a net exporter of steel products, with the rest of Africa accounting for 37% of total exports in 2008. Other significant export markets are the Far East and the EU 27, each of which accounted for 22%, in 2008, as well as South America with 5%, the Middle East accounted for 6% and the NAFTA countries and African island nations with 4% each36.
Fig.9.2 (Vide Page 99) illustrates the global steel production in 2008 in comparison to the year 2003. The figure depicts that global steel production has increased from 945 million tons in 2003 to 1105 million tons in 2008. Commonwealth of Independent States (CIS) formed by Russia which includes Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine contribution to the global steel production has increased from 106 million tons in 2003 to 120 million tons in 2008. European Union (EU) steel production has also increased from 160 million tons in 2003 to 193 million tons in 2008. Major contributor to the global steel production has been Asia with almost 60 percent of the global steel production.
36. Http:// www.engineeringnews.co.za
98
Fig 9.2
&UXGH6WHHO3URGXFWLRQ 0LO7RQ EU(15) = 193
CIS = 120
EU(15) = 160 CIS = 106
Other Europe = 60 N. Am. = 123
N. Am. = 134
Other Europe = 48 M. East = 13
M. East = 18 Africa = 16 S. Am. = 43
Africa = 18
Asia = 428
Asia = 520 Oceania = 8
Oceania = 9
S. Am. = 51
0LO7RQ LQ
RI :RUOG *URZWK
0LO7RQ LQ
Source:www.ifglref.com CIS: Commonwealth of Independent States N.Am:North America S.Am:South America M.East: Middle East
Steel industry reforms - particularly in 1991 and 1992 have led to strong and sustainable growth in India's steel industry. Reforms in 1991 allowed for 100% FDI. Yet another reform for India's Steel Industry came in 1992, when price and distribution controls was removed, restrictions on external trade, 99
both in import and export have been removed , import duty rates have been reduced drastically with a view to making the Steel Industry efficient and competitive.
India continually posts phenomenal growth records in steel production. In 1992, India produced 14.33 million tons of finished carbon steels and 1.59 million tons of pig iron. Furthermore, the steel production capacity of the country has increased rapidly since 1991.
In 2008, India produced nearly 46.575 million tons of finished steels and 4.393 million tons of pig iron. Both primary and secondary (eg.sponge iron) producers contributed their share to this phenomenal development. This has pushed up the demand for finished steel at a very stable rate. In 1992, the total consumption of finished steel in India was 14.84 million tons whereas in 2008, the total amount of steel consumption was 43.925 million tons. With the increased demand in the national market, a huge part of the international market is also served by this industry 37.
Table 13.1 (Vide Page 101) lists the growth of steel production in India from 2002 to 2007. Steel production in India has been increased by a compounded annual growth rate(CAGR) of 8% over the period 2002-03 to 2006-07. Going forward, growth in India is projected to be higher than the world average, as par capita consumption of steel in India at around 46 Kg is well below the world average (150 Kg) and that of developed countries (400 Kg)38.
37.Sources: http://www.economywatch.com/business-and-economy/steel-industry.html 38.source:www.indius.net
100
Table.13.1 The growth of steel production in India 2002-10
Year
Steel production
% Growth
Mil tones 2002-03
34.7
2003-04
38.7
11.53
2004-05
43.4
12.14
2005-06
46.5
7.14
2006-07
50.7
9.03
2007-08
53.8
6.11
2008-09
58.4
8.55
2009-10
64.8
10.95
source: Joint Plant Committee (JPC), Kolkata, 2010
Table 13.2 World refractory demand by market(end-use) (in 000 metric tons and %) Items
2007
2012
2007/2002 2012/2007
refractory 22,865
38,100
45,200
10.8%
3.5%
Steel
13,400
18,170
20,650
6.3 %
2.6%
Other metals
2,845
4,772
5,690
10.9%
3.6%
metallic 3,460
8,910
11,290
20.8%
4.8%
6,248
7,570
14.6%
3.9%
World
2002
demand
Non materials
Other markets
3,160
Source: The Freedonia Group, Ohio, 2012
101
Although the global economic slowdown adversely affected refractory demand across all major markets, a recovery in 2012, creating opportunities for producers. The four major end-use sector or markers are shown in the Table 13.2 (Page Vide 101). In the other metals category, aluminium and copper producers are the two largest users of refractories, based on output rates for the two metals and the need for heat-resistant materials in their production. Other markets include producers of lead, nickel, silver, zinc and others, as well as alloys of such materials. The demand of refractory products in the non metallic mineral sector such as glass, cement, lime and ceramics has increased considerably in 2012, at 4.8 percent per annum.
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CHAPTER 4
4. REFRACTORY MANUFACTURING PLANTS IN ORISSA 4.1 GLANCE AT ORISSA (THE NAME IS CHANGED TO ODISHA) Orissa is located in India's east coast. It is bounded by the Bay of Bengal in the east and by the states of West Bengal in the northeast, Bihar in the north, Madhya Pradesh in the West, and Andhra Pradesh in the south. The state occupies an area of about 156,000 square kilometers. The capital of Orissa is Bhubaneswar, the most populated city in Orissa. Cuttack and Puri are two other cities with high populations. Fig 10 A glance at the refractory industries in Orissa.
Source:www.oddissa.com,2008
103
The history of Orissa has a place of distinction in the Indian folklore. The famous Battle of Kalinga was fought near the city of Bhubaneswar in 260 BC. In the 16th century the Mughals brought Orissa in its empire followed by the Marathas. The British rule entered the political scene and took control of the state in 1803 with the rest of India. Buddhism, Jainism and Hinduism flourished in Orissa. Total Population of Orissa is 4.19 Crore as per census 2011. Total population of Orissa as per 2011 census is 41,947,358 of which male and female are 21,201,678 and 20,745,680 respectively. Literacy rate in Orissa has seen upward trend and is 73.45 percent as per 2011 population census. Male literacy stands at 82.40 percent while female literacy is at 64.36 percent. The most common language spoken in Orissa is Oriya. The average individual income, annually, is 3,963 Rupees39. Industry also plays a key role in the economy of Orissa. Some of the natural resources that are mined are iron, coal, and zinc. Products manufactured in Orissa include textiles, paper, leather goods, cement, soap, glass, aluminum, and flour. The Central Sector Projects are: Steel Plant at Rourkela, SAND Complex at Chhatrapur, Heavy Water Project at Talcher, Coach Repairing Workshop at Mancheswar, Aluminium Complex at Koraput, Captive Power Plant at Angul, Aluminium Smelter at Angul and Fertilizer Plant at Paradip. Major thermal and hydel power stations are Talcher, Hirakud, and Chiplima. Major rhermal and hydel power stations are Talcher, Hirakud and Chiplima. Other power projects are Upper Indravati, Upper Kolab, Rengali and Ib. Figure 22 depicts the refractory industries in Orissa.
39.. http://www.census2011.co.in/census/state/orissa.html
104
Orissa has trade relations with other states of India, the United States, Japan, Britain, and Germany. There are many products that are shipped in and out of Orissa annually. The main exports are expensive gems, fish, fancy jewelry, baskets, and clothing. Orissa also imports many things. The chief imports are machinery and fuel.
4.2 INDO FLOGATE REFRACTORIES LIMITED (IRL)
Incorporated in 1989 in Kolkata, IRL commenced its business in 1990. The company is engaged in the manufacture of refractories for the steel industry with employee strength of 1200 nos. The company has received International Organization for Standardization (ISO) 9001:2000 certification and ISO 14001 certification for effective environmental management standards. The major objective of the ISO 14000 series of norms is "to promote more effective and efficient environmental management in organizations and to provide useful and usable tools - ones that are cost effective, system-based, flexible and reflect the best organizations and the best organizational practices available for gathering, interpreting and communicating environmentally relevant information”40 .
40.http://www.iso.org/iso/iso_14000_essentials
105
Fig 11: Manufacturing facilities in different countries-IRL
Source:www.ifglref.com
It has a worldwide market share of 5%. About 60% of the production is exported of which 28% is exported to Europe alone ie. France, Italy, Poland, Sweden and Germany . The company garners 17% of its turnover from the Indian operations and the balance from international operations41. IRL has manufacturing facilities in five countries namely India, UK, US, Brazil and China with a customer base all over the world. Facilities in UK, US, Brazil and China came under IRL after IRL acquired the Monocon Group-United Kingdom in 2005. Monocon International Refractories Limited, UK produces lances, tundish spray products and slag control dart machines. Some engineering products manufactured in the facility at UK are slag control dart machines, ladle & EF monocators, tundish spray machine. Mono Ceramics Inc. Michigan, US manufacturers lances, purge plugs, precast and 106
castables. Tianjin Monocon Refractories Ltd and Tianjin Monocon Aluminous Refractories Co. Ltd., Tianjin, China manufacture slag control darts, cast products, monolithics, purge plugs, tundish spray and dry vibratable mass. Monotec Refractories Ltd., Fortaleza, Brazil produces tundish spray, precast and castables. IRL Refractories in India produces the products like: continuous casting refractories, slide gate system & refractories, ladle bottom porous plugs, tap hole sleeves, furnace gate & refractories, cast products and monolithic/ castables.
Consolidation through mergers and acquisitions is one possible strategy followed by the refractory makers in particular to obtain economies of scale in the production process, specialisation of factories, sharing of parts and to be present in more markets. There seems to be room for an even stronger consolidation process. Mergers and acquisitions could also be an opportunity in other sub-sectors. Table 14 (Vide Page 109) depicts IRL capacity utilization levels at various plants located worldwide.
41.www.skpmoneywise.com
107
Table 14. Capacity –Globally of IRL, Kolkata(As on 07/04/2011)
source:www.ifglref.com,2011
108
Fig. 12. Schematic diagram of liquid metal flow during steel making process
4.2.1 PRODUCTS . I) Continuous Casting Refractories: It consists of silicon aluminum oxynitride that is placed between a mould and a tundish. 1) Ladle Shroud: Fig. 11 illustrates the process used to control the flow of liquid steel from ladle to tundish and offers maximum protection to steel stream from re-oxidation and minimizes steel splashes. It has excellent thermal shock resistance to withstand the temperature shock at the start of the cast. 2) Monoblock Stopper: It is used to shut on/off the steel stream flow. It is used in the continuous casting of steel and foundry industry. 3) Sub-entry Nozzle/Sub-entry Shroud: It is used to control flow of liquid 109
steel from ‘tundish to mold’. It prevents re-oxidation of steel between tundish and mould. 4) Tundish Nozzles: In combination with monoblock stopper, tundish nozzle controls the flow and protects stream before it exits the tundish. They are made of Alumina-Carbon quality with various shapes to suit customers need on steel grades, quality and flow rate. II) Slide Gate System and Refractories: 1) Flocon Ladle Slide Gate System and Refractories: Based on its simplicity of design, operational efficiency and economy it is the most widely used system globally for teeming of steel. 2) Krosaki Harima Ladle Slide Gate System: IRL has entered into technical collaboration with Krosaki Harima corporation, Japan for the production and supply of ‘Krosaki” FF Series gates and refractories from concept to commissioning. 3) Slide Gate Refractories: It includes ladle slide gate system, tundish slide gate system and furnace gate system. III) ISID Purgemeister Valve (IPV) mechanism and refractories. 1) Gas Purging Refractories & System: The most cost effective and efficient method of gas stirring in a ladle is via a bottom mounted porous plug/purge plug. Purging plug is of unidirectional porosity with slotted design. 2) IPV Gas Purging System: It is one of the critical flow control components in the steel casting process. The basic function of the ladle slide gate system is to control the flow of liquid steel from the ladle to the tundish. IV) Furnace gate valve system and refractories: IRL provides the complete package of refractories, equipments, installation, commissioning and on site training for Furnace Gate Valves for Electric Arc Furnace, Open Hearth Furnace and BOF Converter. Furnace Gate Valve system offers 100% slag free tapping of steel. 110
V) Tube changer mechanism for slab caster: Engineered with decades of experience, IFGL Tube Changer for Continuous Casting Slab Machines is a unique solution for hot tube change to prolong tundish sequence, without cast interruption. VI) Zirconia metering nozzles: Ultra high performing Zirconia Metering Nozzles are meant for short, medium and long sequence of continuous casting of steel. It has a high erosion and corrosion resistance, high thermal shock resistance, high refractories and density. In addition, the company's product portfolio also includes engineered Monocon products. 4.2.2 INVESTMENT RATIONALE 1) Robust demand: Major players in the steel segment fast track their Brownfield* plans. Than, a few Greenfield** projects are also announced by them. With sustained high Gross Domestic Product (GDP) growth and improvement in quality of life, demand for steel and steel products will remain high in India. The brownfield and greenfield projects of the major steel plants would also contribute to a greater demand and provide huge opportunities for the refractory industry.
*Brownfield projects are carried out on land that has previously been developed and used by an enterprise, especially for a manufacturing or processing operation. **Greenfield projects are carried out on unused land where there is no need to remodel or demolish an existing structure eg. factories and power plants
2) Manufacturing facilities: IRL has highly efficient manufacturing facilities spread all over world like, UK, US, China, and Brazil. In India major steel players like Steel Authority of India-SAIL, Tata Steel -Jamshedpur, Rashtriya Ispat Nigam Limited (RINL)-Vishakhapatnam , Essar Steel-Vishakhapatnam, Bhushan Steel-Jharsuguda, Jindal and steel power Limited (JSPL)-Raigarh, 111
Jindal steel works (JSW)-Jharsuguda, Ispat-Mumbai and Pohang Iron and Steel Company (POSCO)- Jagatsinghpur have their plants located in close proximity to the IRL plant located at Kalunga,Orissa. The basic competitive advantages for the steel companies are the availability of logistic and raw materials like, coal and refractory for installation.
3) Acquisition: IRL has gone for technical-cum-financial collaboration with two Japanese companies – Harima Ceramics Company and Nisso Iwai Corporation to increase their production capacity to meet the global steel demand.
4) Other expansion plans: The demand of the user industries has been a guiding lamp for the IRL to strengthen and expand its production base as well as its marketing and distribution network both in domestic and international markets. Russia and other Commonwealth Independent State-CIS countries and China are among the markets that IRL wants to increase its market share. IRL is now eyeing on the export market through merger and acquisitions (M&A) of refractory industries in UK, USA, Brazil and China. M&A will be a competitive advantage for IRL in reaching out to overseas customers like, National Steel-USA , Severstal Russian Steel- Russia and Bluescope SteelAustralia. Fig 13 (Vide Page ), IRL’s additional facility in Special Economic Zone- SEZ at Kandla, Gujarat
shall cater to export market through the
availability of port which will reduce transit time and delivery cost to customers in Middle East and Europe. IRL now has three strategically located manufacturing facilities for CC refractories. EI Ceramics (EIC) located in Cincinnati, Ohio (USA), caters to the US, Canada and Mexico. IRL’s Rourkela (Odisha) plant meets the domestic demand and also to the demand of the steel plants located in South East Asia. 112
IFGL Export Ltd (IEL), Kandla with manufacturing capacity of 300,000 refractory products annually exports its product to the Middle East and European markets. IEL is a subsidiary of IRL set up with the Japanese collaboration (Krosaki Harima Corporation) which is subsidiary of Nippon Steel Corporation. The promoters of the company will hold 70% stake, 20% by Japanese and the rest 10% by IRL. Fig 14. Illustrates IRL’s new upcoming project of Continuous Casting (CC)* refractory at Kandla, Gujarat. Fig 13. IRL’s new project of CC Refractory at Kandla SEZ
source:www.ifglref.com * Continuous Casting is the process whereby molten steel is solidified into a "semifinished" billet, bloom, or slab for subsequent rolling in the finishing mills.
5) Integration of UK's Monocon and Goricon Groups: In September 2005, IRL acquired UK's Monocon Group, with its five manufacturing facilities within its fold. It was acquired for a consideration of £8 million. In December 113
2006, IRL acquired UK-based Goricon Group for a consideration of £1 million. These entities are engaged in manufacturing of darts, lances and ladle powders used in the steel industry. Products manufactured by Monocon and Goricon Groups are for application in the iron and steel industry and there are numerous synergistic benefits like the cost-benefit relation concerning the refractory performance. 6) Technical assistance agreement: IRL has a technical collaboration with Krosaki Harima Corp. Japan, a subsidiary of Nippon Steel Corporation, Japan, for new generation slide gate systems and continuous casting refractories. Krosaki Harima Corp. is the largest refractory manufacturer in Japan with special expertise in new generation slide gate systems and continuous casting refractories and holds a stake in IRL. During financial year 2006-2007, IRL entered into a technical collaboration agreement with Alcar International Ltd, UK for tube changer for continuous casting slab machines. These alliances give IRL access to one of the best technologies in the world and help in increasing market share worldwide.
7) Competitive manufacturing cost base: IRL has set up a subsidiary named Tianjin Monocon Aluminous Refractories Co. Ltd. in Tianjin (China) mainly for manufacturing of refractory darts. The facility has recently started commercial production and shall be primarily used for exports. The company expects a 20% cost reduction from the manufacturing set up in China due to availability of raw materials at a cheaper price.
8) New products: Recently, IRL introduced a range of new products like special precast shapes, Zirconia Nozzles, Tube changer refractories, etc. With its technical tie ups with Krosaki Harima and Alcar International –US, there is a continuous flow of high performance and cost effective products. 114
9) Limited competition: IRL has no threat from new entrants in the refractory industries as it takes a long period to establish in this industry. Some of the established players like, Vesuvius India-Kolkata, Orissa Cement OCL Ltd, Orissa. and Orient Abrasives Pvt Ltd, Rajasthan, are the major existing competitors of IRL in India. 4.2.3 FINANCIAL PERFORMANCE IRL witnessed an increase of 39.8% in net sales of Rs 332.23 crores in FY07 compared to the previous year. This was due to the increase in sales realization and higher capacity utilization levels of unshaped refractories like, monolithics and castables and shaped refractories like, bricks and continuous casting from 95.30% and 63.10% in FY06 to 125.30% and 70.36% in FY07 respectively. IRL's Return on capital employed (ROCE) and Return on net worth (RONW) were at 20.90% and 38.43%respectively in FY07 which indicate a healthy balance sheet. However, a sharp increase in the raw material prices lowered the operating profit margin (OPMs) of the company from 15.74% in FY06 to 14.51% in FY07. Going forward there will be a slight improvement in the OPMs. However, FY08 results were not impressive due to the adverse impact of dollar depreciation and continuous rise in other input costs which in turn had an impact on the Profit after Tax (PAT) margins from 8.18% in FY07 to 7.87% in FY08. New plant at Special Economic Zone ( SEZ), Gujarat has various benefits including tax advantage, duty free imports and can subsequently have better competitive edge with respect to the cost of production and for export due to proximity of port in comparison to other major existing competitors like. Tata Ref Ltd, OCL Ltd, Sarvesh Refractories Ltd and Manishri Refractories and Ceramic Pvt Ltd in Orissa. Fig. 14 illustrate the strong financial performance from 2003-2010. 115
Fig: 14 IRL-Financial performances 2003-2010
Consistent growth in the steel industry has helped in increasing the demand for refractories. Organic and inorganic expansions by IRL to meet the growing demand and continuous cost cutting strategies will have impact on overall margins with increase in revenues. IRL's net sales and PAT grown at a CAGR of 19.31%and 21.58% respectively, over FY07-10.
116
4.2.4
CORPORATE
SOCIAL
RESPONSIBILITY
AND
ENVIRONMENTAL MANAGEMENT
IRL is taking initiative towards the development of its surrounding community and motivate them towards a better tomorrow and in regard undertaken several programmes for: 1. Periphery Development 2. Inclusion development- health , education and hygiene
IRL has adopted Priyadarshini UP School and also operate a charitable homeo clinic at Kalunga in Orissa. And environmental care initiatives with installation of an effluent treatment plant at Kalunga in Orissa.
4.3 TATA KROSAKI REFRACTORIES LTD (FORMERLY TATA REFRACTORIES LIMITED,TRL)
The vision of TRL is to be a “Global Refractory Company” and the mission is “TRL shall be a high performance and technology driven organization committed to create value for all its stakeholders”. It is one of the few Indian companies in this industry to have implemented quality assurance certification through ISO 9001:2000 in 1994 and Integrated Management Systems in 2006. An integrated management system is aimed at organizations with a single management system which incorporate two or more management system standards (for example, ISO 9001 and ISO-14000). TRL has achieved credential with many national and international awards for the quality of its products and consistent performance. Tata’s name, which is known for its business values and ethics, has one of the best equipped 117
Research & Development facilities, a strong Enterprise Resource Planning (ERP) coverage, and a production capacity of 175000 tons per annum. It also owns captive mines at Talbasta (Fire clay), Cuttack and Chhuinpalli (Quartzite), Jharsuguda located in Odisha. TRL has access to world class products and technology because of the agreements with Lichtenberg, Germany; Dolomitwerke, Germany; Krosaki Refractories, Japan; Monocon Refractories, UK; Stopinc AG, Switzerland; AP Green, USA. TRL’s customers are located in Japan, Bangladesh, Malaysia, Pakistan, Iran, USA, Zambia, Chili, Zimbabwe, Saudi Arabia, and South Africa. TRL’s global marketing partner is Tata International Limited located in Kuala Lumpur, Malaysia42. The company has a wide range of products which include Basic, Dolomite, Flow Control, High Alumina, Monolithic & Silica refractory. It also provides services like the total refractory management and total solution consisting of design and application of refractory for user industries on contract basis. With operations in Jharkhand, Orissa, Tamil Nadu, West Bengal in India, and China it caters to a variety of customers in Steel, Glass, Cement, Zinc, Copper, Petrochemical, and Aluminium industries.
In India TRL is the market leader and has approximately 23% of the market share followed by IRL with 7%. TRL has invested Rs.282 crores in 2009 to become a global player with major merger and acquisitions both in India and abroad to remain competitive in the global market with employee strength of 1360 nos. In 2011 after acquisition of 51% shares of TRL by Krosaki Harima Corporation (KHC) Japan from Tata steel. TRL has changed its name to TRL Krosaki Refractories Ltd43. 42. http://www.tataref.com/corporate/aboutus.php. Accessed on May 19, 2008. 43. http://www.tata.com/tata_refractories/media/20040928.htm. Accessed May 19, 2008.
118
The Tata Group, parent company of TRL, consists of 98 companies operating in seven sectors: consumer products services, engineering, information systems and communications, energy, materials and chemicals. Its revenue in 2007-08 were USD 55 billion (around Rs. 220, 000 crores), with a market capitalization of USD 60.89 billion( around Rs.243,560 crores) and a shareholder base of over 2.9 million. Its 27 publicly listed companies have a combined market capitalization which is the highest amongst Indian private sector business houses. The Tata Group Companies export products and services to 85 countries and have operations in 80 countries, spanning six continents. The Tata companies share a set of five core values: integrity, understanding, unity, excellence and responsibility44.
4.3.1 PRODUCTS REFRACTORIES BASKET : PRODUCT WISE
TRL is the largest manufacturer of refractory in India having wide range of refractories to cater service to almost all industry. Fig.15 illustrates the products manufactured by TRL using its own brand name to cater to the user industries according to the application area and specification defined by Bureau of Indian Standards(BIS).
44. http://www.tata.com/0_about_us/group_profile.htm. Accessed June 10, 2008 119
Fig 15.3.Porous Plug, Sleeve and Fig 15.4.Magnesia Carbon Bricks Nozzle
continuous for Basic Oxygen furnace-BOF,
for
casting(Brand
TATA Electric Arc Furnace-EAF and
Name:
Ladle Furnace-LF (Brand Name-
MPP)
TATA HMR)
Fig 15.6.Normal quality Magnesite Fig
15.5.Direct
Bonded Chrome Bricks(Brand Name-TATA
Magnesia-Chrome Bricks
MCR)
120
Fig 15.7.Magnesite Bricks and Fig 15.8.Silica Bricks for Coke Oven, Hot Stove and Glass Tank
Chimney Block
Furnace
Fig
15.9.Fireclay
and
High Fig 15.10.High Alumina, Mullite &
Alumina Bricks(Brand Name: Zircon Refractories TATA 45D, 55D and 62D)
121
Fig Fig 15.11.High
15.12.Precast
Blocks
Alumina and manufactured with low Cement
Alumina Carbon Bricks
High Alumina Castables
Types of product’s manufactured:
i) Refractories (Shaped are in a form of bricks or continuous casting) Basic Silica Silica Carbide Dolomite Fire clay and High Alumina Flow Control Zircon ii) Refractories (Unshaped are in the form of powder) Castables Ramming Masses Gunning Masses Spraying Masses Coating Masses 122
Fettling Masses Flow Control Masses Patching Masses Mortars Plastics
4.3.2 INVESTMENT RATIONALE:
1. TRL sets up its first Greenfield manufacturing unit in China to manufacture Magnesia Carbon refractory in 2006. With a capital investment of Rs. 37 crores and a production capacity of 30,000 metric tones per annum, this strategic initiative has been taken to leverage the proximity to raw material sources and to avail the low manufacturing- cost structure of the Chinese economy. 2. TRL is trying to spread the company’s reach across the market in a big way with upcoming factory at Vizag entailing an investment of Rs.190 crore with capacity of 3 lakh tons45. 3. TRL expanded its Indian operations by starting two new operations in Jhansi and Hyderabad in 2009. Both operations have been started on the concept of partnering and collaboration. TRL has provided its technology, quality control, marketing support and product brand. The partners are Eastern Refractories at Jhansi, Madhya Pradesh and Rassi Refractories at Hyderabad, Andhra Pradesh. 3. In 2011 Krosaki Harima, Japan merged with TRL after acquisition of 51% stake in Tata Refractories from Tata Steel. Now TRL expects to gain access to the latest technology and new markets for its operations46. 45 http://economictimes.indiatimes.com/articleshow/msid-1690422. Accessed March 1, 2008. 46 http://timesofindia.com/articleshow/msid-46995987. Accessed May 19, 2008.
123
4.3.3 FINANCIAL PERFORMANCE: After the merge, KHC and TRL have jointly emerged as the 4th largest refractory manufacturer in the world. The gross revenue of TRL increased to 7 percent i.e., from Rs.867 Cores of the 2009-10 to Rs.927 Cores in 2010-11 . The consolidated revenue which includes the revenues of TRL China Limited was Rs.1008 Cores in 2010-11 compared to Rs.970 Cores of year 2009-10, which shows an increase of around 4 percent. TRL has achieved the distinction of being the 1st Indian refractory company to cross Rs.1000 Cores consolidated revenues. The gross production during 2010-11 was 2, 34,831 tones. against 2,53,334 tones. of 2009-10, a reduction of 7 percent. The overall sales volume during 2010-11 was 3,18,0871 against 3,20,3991 of year 2009-10, a decrease of around 1 percent. Table 15 bellow Illustrates the financial performance of TRL from 2005-2011. Table 15 Illustrates the financial performance of TRL from 2005-2011 (Rupees in Cores) 2010-11
2009-10
2008-09
Turnover
926.87
867.17
735.82
Profit Before
100.06
91.56
Depreciation
21.46
Profit before
2007-08
2006-07
2005-06
587.26
521.17
460.43
91.87
66.62
56.59
65.96
20.98
20.89
18.11
17.18
66.33
59.68
53.90
36.76
30.59
42.69
38.47
Interest, Depreciation & Taxes 11.13
51.67
Taxes Profit
after
34.44
21.66
18.98
35.40
Taxes 124
25.77
46.04
43.10
31.21
27.60
37.07
252.54
248.14
223.08
200.86
187.77
182.56
Borrowings
113.09
110.38
115.72
Dividends
38.38
13.41
12.23
Retained Earnings Shareholders' Funds
126.93
116.11
91.14
8.56
8.56
9.46
(including tax) Source: www.reportjunction.com,2011
Although production and sales volume in 2010-11 were lower than that of year 2009-10, the total revenue was higher mainly due to better product mix. Despite abnormal increase in the price of power and fuel, the profit before tax for the year 2010-11 was Rs.66 Cores against Rs.60 Cores for the year 200910, which shows an increase of 10 percent. The profit after tax for the year 2010-11 was Rs.43 Cores against Rs.38 Cores for the year 2009-10, which shows an increase of 13 percent. Because of better product mix, improved operational efficiency, cost reduction measures and efficient financial management the financial performance of the company is improving amidst competition and recession in the market.
125
4.3.4
TRL’S
CORPORATE
SOCIAL
RESPONSIBILITY
AND
ENVIRONMENTAL MANAGEMENT TRL as a responsible corporate citizen and in keeping with the ethos of Indian Refractory Makers Association (IRMA), TRL has taken active interest in pollution control, safety , health care and community development activities. Pollution Control •
Existence of a dedicated Environment protection cell with a state of art environment lab.
•
Regular monitoring of air and water quality .
•
Installation of various air pollution control system, eg. fabric filters.
•
Training classes for employees to create awareness on pollution hazards and safety measures.
•
Annual mass plantation drives resulting in green belt around township
•
Recipient of National Golden Peacock Environment Management Award, 2011.
Health •
A well equipped hospital in the township.
•
Annual health check drives for all employees.
•
Training classes on health and stress management and fitness regimen for all employees.
126
Safety •
The Company's effort to implement the health care facilities and safety measures has been well recognized by the Government. Best Occupational Health Care Company award, 1995 from Govt of Orissa. National Safety award, 2006 from Govt of India.
•
Regular training classes for all employees on safety.
Community Development •
Infrastructure development of villages through construction of roads, village ponds, Community centers and school buildings.
•
Employment
generation
schemes
like
pisiculture,
horticulture
cultivation and sewing classes are being promoted for creating selfemployment. •
Entrepreneur
Development
Programmes
(EDP)
for
imparting
entrepreneurial skills and inputs amongst the villagers. Besides these, the TRL undertakes a few other activities like, health care facilities, family planning operations, health check up camps and eye operation camps. Pharmacists of TRL render free treatments to the villagers nearby the factory as part of its corporate social responsibility.
4.4 OCL INDIA LTD
OCL India Limited, formerly "Orissa Cement Limited” and better known as “OCL” , was established in the year 1949 at Rajgangpur, Orissa. It started 127
producing cement through wet process technology under the brand name of "Konark". Keeping a steady progress with time and technology it has modernized to fully automated dry process plant in 1988. OCL commands the position of market leadership in the state of Orissa since its inception and today it is the premier lead brand in the state of Orissa. ‘Konark' brand cement enjoys brand advantage in the region.
ACHIEVEMENTS Table 16 below shows the achievements of OCL i.e. its phases of development, expansion plan etc. year wise from the year of establishment i.e. 1949. Table 16. OCL’s milestones year wise YEAR
MILESTONES
1949
Established as Orissa Cement Limited
1954
Diversified into refractories
1956
Commissioning of firebricks plant
1958
Commissioning of silica plant
1959
Commissioning of burnt basic brick plant
1962
Manufacture of chemically bonded basic bricks
1963
Manufacture of coke oven silica
1972
Expansion of silica plant
1986
Manufacture of MG-C brick
1986
Manufacture of slide plate
1992
Commissioning of concast plant
1992
Commissioning of castable & precast plant
128
1992
Export of silica bricks
1994
ISO 9001 certification
1997
Further expansion of silica plant
1999
Manufacture of directional purging element
2000
Modernisation of concast plant
2001
Modernisation of castable & precast plant
2004 2005
Further modernisation of concast started Modernisation of concast plant in process
Source:www.oclindialtd.in
PRODUCTION CAPACITIES
OCL’s Refractory plant is situated at Rajgangpur with a total installed capacity of 106400 MT per annum to produce the various types of refractories with employee strength of 1000 nos.
Table 17. OCL’s production capacity for different products - Mt ton per year.
PRODUCTION
CAPACITY
SILICA BRICKS
30,000
MT / YR
BASIC BURNT BRICKS
22,000
MT / YR
MAGNESIA CARBON BRICKS
8,000
MT / YR
FIRECLAY & HIGH ALUMINA
25,000
MT / YR 129
BRICKS CONTINUOUS CASTING
2,000
MT / YR
SLIDE GATE REFRACTORIES
2,000
CASTABLES & PRECAST BLOCKS
11,000
MT / YR
BASIC, SILICA & HIGH ALUMINA
6,400
MT / YR
106,400
MT / YR
RAMMING MASSES / MORTARS TOTAL
Source:www.oclindialtd.in, 2011
4.4.1 PRODUCTS OCL diversified from Cement to the field of refractories in 1954. Over the years, it has become one of the largest and well-equipped state of the art refractory plants in India covering a wide range of products for use in the Ferrous & the non-ferrous industries. Its customer base spreads from iron and steel to cement, aluminum, glass, copper, chemicals and hydrocarbon industries. The initial technical know how came from M/S Dr.C.Otto of Germany for Coke Oven Silica bricks and from M/S TYK Corporation of Japan for Magnesia-Carbon, Alumina-Mag-Carbon, Alumina-Silicon CarbideCarbon, Concast Refractories, Lance-pipe, Precast, Purging Plug, & BF Runner castables. OCL’s in-house research and development activities promoted by Dalmia Institute of scientific and Industrial Research(DSIR) are engaged in the new refractory products development with upgraded technology for the user industries. OCL was the first refractory company in India to be certified under ISO 9001, by RWTUV of Germany in 1994. Then , it updated itself to 2000 version for its all range of products.
130
4.4.2 INVESTMENT RATIONALE: OCL is reckoned to be in the big league of reputed refractory suppliers in the world market. OCL refractory products are supplied to the major steel plants and other non-ferrous plants located in Canada, USA, Brazil, UK, Sweden, Netherlands, Hungary, Spain, Italy, Turkey, Japan, South Korea, China, Thailand, Malaysia, Indonesia, Australia, Egypt, Kenya, South Africa, Saudi Arabia, Jordan, Qatar, Iran, UAE, Kuwait, Pakistan, Bangladesh, Sri Lanka & many more. Starting with initial technical know how from Dr. C. Otto and Co, Germany, OCL subsequently entered into a collaboration with General Refractories of USA for expansion of its factory and enlargement of the product line. OCL entered into collaboration for refractory technology with T.Y.K Corporation of Japan for manufacture of magnesia carbon bricks, new generation castables, precast blocks, continuous casting refractory, alumina silicon carbide carbon and alumina magnesia carbon refractory. Recently the company has entered in to a tie up with Pilibrico Gmbh, Luxembourg for manufacture of gas purging refractory.
4.4.3 FINANCIAL PERFORMANCE The year 2010-11 has been a very challenging year for OCL with respect to performance. Increasing raw material prices and reducing product prices have put tremendous pressure on operations. Severe cost reduction measures by way of innovations in process, e.g., Total Productive Maintenance in Concast plant, change in method of firing silica bricks, revision of incentive schemes and search for alternative raw materials, were taken to offsetting the increased cost of raw materials. Table 17 depicts the sales of the company grew to Rs.29,327 Lakhs in 2010-11 from Rs.26,442 Lakhs of the 2009-10 which shares an increase of 10.9 percent. However, earnings before interest, taxes, 131
depreciation, and amortization (EBITDA) fell from Rs.3,524 Lakhs in FY 2009-10 to Rs.2,418 Lakhs in FY 2010-11. This decrease of 31 percent is due to lower cement prices in the market and higher input costs. Table 18 below illustrates the sales figure of OCL from 2006-2011. Table 18 illustrates the financial performance of OCL (Rupees in Lakhs)
Sales
2010-11
2009-10
2008-09
29,327
26,442
29,748
2007-08 21,275
2006-07 20,751
Source: www.oclindialtd.in
4.4.4
OCL’S
CORPORATE
SOCIAL
RESPONSIBILITY
AND
ENVIRONMENTAL MANAGEMENT
Your Company has always been giving priority to community development. OCL has undertaken a number of developmental activities in peripheral areas of Rajgangpur and Lanjiberna, Odisha for improving the social and economic condition of tribals. The activities are mainly focused in areas like health, education and drinking water. The Company is also operating a mobile health care unit for the senior citizens in Jagatsinghpur District of Orissa through “Help Age India”, NGO of National repute.
4.5 SARVESH REFRACTORIES LTD-ROURKELA
It is one of the leading refractory manufacturers in India, accredited with ISO 9001:2000 certification, equipped with all the modern facilities to manufacture a complete range of high performance new generation refractory. 132
Sarvesh provides a complete range of refractory solutions to all the steel, cement, petrochemical, ferrous and non-ferrous manufacturing units. The SARVESH Group is presently having three Refractory manufacturing units with employee strength of 225 nos. Table 19 depicts first unit was established near Rourkela, Orissa which manufactures various types of magnesia carbon, alumina magnesia carbon, alumina carbon, alumina silicon carbide carbon, fired magnesite, mag chrome, chrome mag quality bricks and also various types of basic ramming masses and gunning mixes with production capacity of 25000 tons of bricks and 15000 tons of monolithics per annum. The second unit at Bavla, Gujarat with production capacity of 35000 tons of bricks and 15000 tons of monolithics per annum and third unit at Hyderabad, Andhra Pradesh with manufacturing capacity of 35000 tons of bricks and 15000 tons of monolithics per annum. Table 19. Production Capacity of Sarvesh group located across India. PLANT LOCATION
CAPACITY (Tons /
Annum) BRICKS
MONOLITHICS
KUARMUNDA (Orissa)
25000
15000
BAVLA (Gujarat)
35000
15000
HYDERABAD(Andhra Pradesh)
35000
15000
Source:www.sarvesh.com,2010
4.5.1 PRODUCTS: The manufacturing units of Sarvesh Refractories are located across India like, Kaurmunda(Orissa), Bavla(Gujarat) and Hyderabad. It is accredited with ISO accreditation and equipped with trained application engineers. The unit located at Rourkela manufactures various types of magnesia carbon, alumina 133
magnesia carbon ,fired magnesite and various types of ramming masses and gunning mixes. The second unit located at Gujarat manufactures high alumina refractory bricks because of the availability of good quality materials like, Bauxite from Saurashtra and Kutch and import of special grade of materials from China due to the closeness to the port. And the third unit at Hyderabad manufactures silica, fire clay, high alumina, basic refractory bricks , monolithics and mortars. 4.5.2 INVESTMENT RATIONALE RAASI Refractories Limited, Hyderabad and VRW Refractories Limited (a unit of SICAL Group) was taken over by Sarvesh group in 2004. Sarvesh group has setup in-house rotary kilns to facilitate supply of quality calcined* materials for the manufacturing of refractory products with better performance. The units are equipped with necessary testing facilities and quality control systems to ensure quality products. 4.5.3 FINANCIAL PERFORMANCE Table 20 illustrates Sarvesh refractories profit after tax (PAT) of Rs.24 million on net sales of Rs.762 million for 2007-08 , as against a PAT of Rs.19 million on net sales of Rs.722 million for 2006-07. Table
illustrates 2009-10,
Sarvesh refractories had a profit after tax (PAT) of Rs.35 million on net sales of Rs.867 million, against a PAT of Rs 25 million on net sales of Rs.736 million for 2008-09.Table 20 Sarvesh’s financial performance (Rupees in Millions) 2010-11 Net Sales
870
2009-10
2008-09
867
736
2007-08
762
2006-07
722
Source:www.crisil.com,2011 *calcining means burning of raw materials and high alumina refractory cements at the desired temperature 134
4.5.4 SARVESH’S CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL MANAGEMENT
Sarvesh refractories have undertaken community development initiatives with energy saving awareness programme at the plants i.e application of insulation materials.
4.6 MANISHRI REFRACTORIES & CERAMICS [P] LTD
Manishri refractories was started with a small project in 1972 at Madhupatna, Orissa. It has become one of the fastest growing enterprises with employee strength
of
22
nos.
Dedicated
to
ensure
clear focus on growing customer requirements, it
quality,
with
a
emerged as one
of the internationally reputed manufacturer s of wide range of quality refractory
products.
The success has not come overnight. Since last two decades, Manishri has been regularly upgrading technology, implementing world standards and identifying new areas and applications for achieving success in the refractorymarket . At
the center of all the change, have been the peo
ple, a group of dedicated & skilled manpower - "the driving force of any enterprise".
This focus on manpower has helped
Manishri
to
create specialised and customised products for its clients. 4.6.1 PRODUCTS Manishri is located in the coastal belt of Orissa , a beautiful land with abundant natural resources, in eastern India. The manufacturing facilities have the latest plant and machinery , which are upgraded. The facilities are mainly engaged in the production of refractory bricks, monolithics , precast shapes and specialties. Manishri crowned its continuous quality performance by 135
obtaining the ISO 9002 certification in the year 2001 from NQA QSR North America (NQAQSR) was established in 1992, as a training & certification body to assist organizations in India in their march to obtain quality systems certification by providing the timely auditing services. Manishri offers its clients with high quality products within time bound delivery period.
Table 21 illustrates Manishri’s growing clientele list of customers in Orissa and India.
Table 21 The Clientele Database of Manishri. Orissa 1
Ferro Chrome Plant, Jaipur Road
2
Konark Metcoke Ltd, Duburi
3
Kalinga Iron works, Keonjhar
4
National Aluminium Co. Ltd, Nalco Bhawan, Bhubaneswar
5
OCL India Ltd, Rajgangpur
6
OSIL Steel Works, Keonjhar
7
Regional Research Laboratory, Bhubaneswar
8
Rourkela Steel Plant, Rourkela
India 1
Bhilai Steel Plant, Bhilai(SAIL)
136
2
Bokaro Steel Plant, Bokaro(SAIL)
3
Bharat Electronics Ltd, Taloja
4
Bharat Heavy Electricals Ltd, Chennai
5
Bharat Aluminium Co. Ltd, Korba, Chhattisgarh
6
Central Glass & Ceramics Research Institute, Kolkata
7
Durgapur Steel Plant, Durgapur(SAIL)
8
Hindustan Petroleum Corporation Ltd, Visakhapatnam
9
Hindustan Zinc Ltd, Visakhapatnam & Chittorgarh.
10
Indian Charge Chrome Ltd, Choudwar
11
Indian Metals & Ferro Alloys Ltd, Visakhapatnam
12
Mideast Integrated Steels Ltd, New Delhi
13
Research and Development Centre for Iron & Steel, Ranchi(SAIL)
14
Visakhapatnam Steel Plant, Visakhapatnam(RINL)
Source:www.manishri.com, 2011
4.6.2: INVESTMENT RATIONALE:
Manishri has strategic alliance with Research and Development centre for iron an steel (RDCIS) at Ranchi and Central Glass and Ceramic Research Institute (CGCRI) at Kolkata for continuous development and up-gradation of future generation of refractories. The Research and Development facility also emphasises process monitoring and quality control.
4.6.3 FINANCIAL PERFORMANCE Manishri refractories in 1991, reconstituted as a private limited company. The company manufactures alumina silicate refractories products, with current 137
installed capacity of 24,000 tonnes per annum (tpa), at its facility in Madhupatna (Orissa). Manishri’s main competitors are OCL and Sarvesh Refractories . Table 22 illustrates Manishri’s profit after tax (PAT) and net sales are estimated to be Rs.15.6 million and Rs.490.7 million respectively for 2009-10, against a PAT of Rs.8.9 million on net sales of Rs.286.9 million reported for 2008-09. Net sales decreased to Rs.452.0 million in 2010-11 due to increase of raw material prices. Table 22. Manishri’s financial performance (Rupees in Millions)
Net
2010-11
2009-10
2008-09
452.0
490.7
286.9
2007-08
2006-07
175 .6
150.5
Sales Source:www.crisil.com, 2011
4.6.4 MANISHRI’S CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL MANAGEMENT
Manishri
refractories
making
major
trust
on
achieving
highest
possible quality standard products and services through rigid process control, dedicated
team
work, safety reliability,
social responsibility
and environment at large to its customers.
4.7 RESEARCH & DEVELOPMENT (R&D)
Technology Division of IRL, TRL, OCL, Sarvesh Refractories and Manishri Refractories are organized into three groups ie. Technology group, testing group and a core R&D group. This division assists the marketing division and 138
handles the enquiries. Basing on the technical specifications, the technology group selects the products required to fulfill a given order. Processes required for the manufacture of different products are first designed by the Technology Group and then it is transferred to the production division. The Technology Group assists in the production through Quality Control and Testing. They are also responsible for bringing continuous improvement in the product quality and
process
efficiency.
The Testing Group tests the in-coming raw materials and inspects the final products. The core R & D group works for the development of new and improved products with lowest cost to maintain a cost and quality edge. The Technology Division works toward the cost effective refractory maker47. Objectives of R&D division : 1. to control the quality of raw materials. 2. to identify the need and type of refractory for domestic & export industries. 3. to have research on new technologies of refractory. 4. to improve the production technology by removing obstacles and problems. Lab complex of this division is composed of Mineral processing and sample preparation lab, physical testing lab and chemical testing lab. Laboratory trials are carried out in technology workshop and pilot plant. This complex is also equipped with knowledge centre and Internet network. Fig 16.1-16.4 (Vide Page 141) illustrates the R & D equipments. The functions performed by the lab equipments as follows:
47. Internet available www.tataref.com 139
1. Chemical analysis of ceramic raw materials and products. 2. Providing thin and polished sections. 3. Optical microscope & hot stage microscope. 4. X-ray diffractometery (XRD). 5. Granulation, density and porosity. 6. Thermal expansion coefficient. 7. Thermal conductivity. 8. MOR/Cold crushing strength-CCS and abrasion resistance. 9. Refractoriness (PCE) and refractoriness under load(RUL). 10.Hot modulus of rupture (HMOR) and thermal shock resistance. 11.Pore size distribution . 12.Creep 13.Rotary slag corrosion resistance . 14.Modulus of elasticity and ultrasonic testing for lamination and cracks
Fig
16.1.Hot
Stage Microscope
140
Fig
16.2.High
Temperature Dilatometer
Fig 16.3.Climate Chamber
141
Fig
16.4.Hot
MOR
test
Equipment
Source:www.tataref.com,2009
142
4.8 PACKAGING & SHIPPING
The most important aspect of marketing is the packaging and dispatching of materials to the customer. Fig 17 illustrates special packaging for the export customers before shipment to the different countries through containers.
Factors deciding the choice of packing: • Type of material • Type of transport and destination • Unloading facilities at destination Available choice: • Cardboard box packing • Polythene bag and cardboard box packing • Straw bundling • Palletized brick packing • Vacuum shrunk packing • Polythene lined gunny bag packing, mainly for monolithic. • Special packing as per customer’s choice/specification. • Facilities for Containerized transportation
143
Fig.17.1.Special Packaging for Export
Fig 17.2.Export Shipment of Refractories
Source:www.tataref.com, 2009
144
4.9 PRODUCTS AND COMPETITORS IN THE DOMESTIC AND GLOBAL MARKET
TRL is the top refractory manufacture followed by IRL, OCL, Sarvesh and Manishri in Orissa. Fig 18.1. Illustrates TRL’s major competitors in domestic and export market for the refractory product like, Dolomite. Dolomite is the product manufactured by TRL solely, which is applicable in Argon Oxygen Decarburization (AOD) . But in the export market LWB, Germany is the major competitor due to easy accessibility of high quality refractory grade dolomite reserve imported from York (USA), Hagen-Halden (Germany), Marche-les-Dames (Belgium) and Qingyang (China). Direct Bonded MagChrome Bricks (DBMC) is another major product of TRL. OCL is the only major competitor of TRL in the domestic market. Whereas the only major competitor for export markets are dominated by RHI, Austria because of easy access to the global customers with products available from different plants located in Austria, Germany and China 48. TRL’s major competitors for flow control refractory in export market are RHI, Austria and Vesuvius, Austria and in domestic market are OCL India Ltd-Rajgangpur, Orissa, Orient Abrasive Ltd- Porbandar, Gujarat and IRL-Kalunga, Orissa.
48.Internetsources:available:http://www.rhiag.com/internet/en/refractories/News_20MR/2008_20News_20div_20_28e_2 9/PA__Clasil_20Er_C3_B6ffung_20zweite_20Produktionslinie_20092008.html
145
Fig 18.1. Product wise competitors in Domestic and Global
(source: www.tataref.com, 2011)
Fig 18.2 illustrates that TRL’s major competitor for export market is RHI for the silica and basic refractory products due to strong presence in European market . In 2009 RHI bagged an important order of 12 million Euro, for the supply of refractory material in the construction of two new float glass furnaces49 in Austria. Fig 15.2. product wise competitors in Domestic and Global…contd
(Source:www.tataref.com, 2011) 49.http://www.rhiag.com/internet/en/refractories/News_20MR/2009_20News_20div_20_28e_29/FachPA__glass__new_ 20loat_20glass_20furnace__09022009.html
146
Fig 18.3 illustrates that TRL’s presence in the supply of unshaped refractory in domestic market has been facing stiff competition from the small player like Manishri refractory-Orissa. RHI is the only major threat in export market because of availability of cost effective products with better performance to the user industries. Fig 18.3. product wise competitors in Domestic and Global …contd
(source:www.tataref.com, 2011)
147
CHAPTER 5 5. COMPETITIVENESS AND FIRM PERFORMANCE REVIEW 5.1 INTRODUCTION
Modern economic environment demands a critical study related to competitive dimensions and advantages for the long term survival of any company. Therefore, techno-economic parameters, cost effectiveness, human resource management issues, research & development, environment management, public relations, cost competitiveness, quality competitiveness, with regard to refractory sector in India have been discussed here in detail. This chapter also discusses the policies of marketing and strategic planning as well as the demand for refractory.
5.2. COMPETITIVE DIMENSIONS & ADVANTAGES:
Given the choices a customers gets today, it is really very difficult to sell a product or a service. Different customers are attracted by different attributes. For example, some are primarily interested in the cost of a product or service, and some are in quality of a product or a service correspondingly companies attempt to position themselves to offer the lowest price or highest quality. Therefore, an endeavor has been made here to discuss the major competitive dimensions that form the competitive position of a company.
Cost – “Make it cheap” within every industry, there is usually a segment of the market that buys solely on the basis of low cost. To successfully compete in this niche, a firm must be the low cost producer, but even doing this does not always guarantee profitability and success. Refractory Industries like IRL being located in a SEZ zone like Gujarat, India, derive some benefits from 148
duty exemption with respect to procurement of raw materials. China with the availability of quality raw materials generate demand to increase the duty on the raw materials imports, directly having impact on the refractory products.
Product quality and reliability – “Make it good”. Quality can be divided into two categories: product quality and process quality. The level of quality in a product’s design varies with the market segment at which it is aimed. Obviously, at a competitive market price, user industries appreciate refractories manufactured with superior quality and reliability with respect to performance like, monolithic castables in respect to other refractory products. The goal in establishing the proper level of product quality is to focus on the requirements of the customer. Over-designed products with much quality consciousness are viewed as prohibitively expensive. Under-designed products, on the other hand, lose customers to products that cost a little more but are perceived as high value by the customers. Process quality is critical because it relates directly to the reliability of the product. Thus, the goal of process quality is to produce error free products. Therefore TRL, IRL, OCL, Sarvesh and Manishri are going for technological tie up with renowned refractory manufacturers around the world. Delivery speed—“Make it fast” in some markets, a company’s ability to delivery more quickly than its competitors may be critical. Seeing a need for speedy, reliable overnight delivery, IRL and TRL have set up plants in, Kandla of Gujarat and Hyderabad of Andhra Pradesh respectively for close proximately to port, to reach the overseas customers at right time with right product. Delivery reliability—“Deliver it when promised.” This dimension relates to the ability of the firm to supply the product or service on or before a promised 149
delivery due date. For refractory manufacturers it is very important to have reliable suppliers of raw material to provide the needed quantity and types for each day’s production, so that manufacturer can supply the product to the customer on or before delivery date. TRL and IRL prepare production planning prior to 3 months for actual production according to the procurement of orders received from the domestic and international market well in advance by the marketing personals. It enables them to go for the smooth production and dispatch of products before the delivery date to the customers from the factories.
Coping with changes in demand – “Change its volume.” In many markets, a company’s ability to respond to an increase or a decrease in demand is an important factor in its ability to compete. It is well known that a company with increasing demand can do little wrong. When demand is strong and increasing, costs are continuously reduced due to economics of scale, and investments in new technologies can be easily justified. But scaling back when demand decreases may require many difficult decisions relating to laying off employees and related reduction in assets. The ability to effectively deal with dynamic market demand over the long term is an essential element of operations strategies. During the period between 1996 and 1998, TRL faced a major cash-flow crisis. The entire refractory industries, in India as well as in the rest of the world were also in a bad phase due to economic recession.
To cope up with the situation, TRL installed Information
Technology (IT) infrastructure and invested capital for modernization and expansion to the present set up. Flexibility and new product introduction speed—“Change it”. Flexibility, from a strategic perspective refers to the ability of a company to offer a wide variety of products to its customers. An important element of this ability to 150
offer different products is the time required for a company to develop a new product and to convert its processes to offer the new product.. The acquisition of Hofmann Group enables IRL to enter new business area of supplies of consumables to foundries. 5.3 COMPETITIVE ADVANTAGE OF REFRACTORY INDUSTRIES IN ORISSA.
A competitive advantage is an advantage over competitors gained by offering greater value to the consumer, either by means of lower prices or by providing greater benefits and services that justifies higher prices. Core competencies differentiate an organization from its competition-they create a company’s competitive advantage in the marketplace. India’s competitive advantage for the refractory makers has been the biggest contribution to the survival of the user industries like steel, copper and glass.. However to sustain competitive advantage for moving steadily on the globalization path, the steps adopted by refractory makers in Orissa are as follows:
5.3.1 TATA KROSAKI REFRACTORIES LTD(FORMERLY KNOWN AS TRL) 5.3.1.1 Competitive Advantages: Harnessing the new and better sources of raw materials: One of the biggest strengths of TRL was that it has captive sources for all key raw materials: Talbasta (Fire clay), Cuttack and Chhuinpalli (Quartzite), Jharsuguda located in Orissa. Modernization of facilities: TRL has upgraded manufacturing facilities and the capacity at Belpahar unit , Odisha to cope with the new demand. TRL China has set-up green field plant for manufacturing mag carbon bricks. 151
Quality and Cost at the centre-stage: TRL initiated to take the company into higher levels of performance on two important dimensions of quality and cost. This include: value engineering, ISO 9000, benchmarking, quality circles, continuous improvement projects and cost reduction initiatives. Journey towards excellence: In 1996, TRL systematically embarked on the quest for excellence for the organization as a whole through adapting the Tata Business Excellence Model (TBEM) which covers almost every aspect of corporation including visionary leadership , focus on future, focus on results, customer-driven excellence, valuing
employees
and
partners,
managing
innovation
and
public
responsibility. Transformation into a customer-driven culture: TRL has successfully made the transition from operating in a seller’s market prior to the liberalization to one that was ready to win in a buyer’s market. The delivery system was re-engineered with the help of consultants to cater to customer and market requirements.
Challenges of being internationally competitive: With all the steps discussed above, a lot of progress has been made in putting TRL back on track and positioning it strongly to face the emerging competition in India and overseas. Today, it is one of the very few companies worldwide with the capability to produce such a comprehensive range of refractories finding application in industries such as iron and steel, cement, copper, glass, aluminium, foundries, petrochemical complexes, fertiliser plants, etc. TRL’s two service offerings — refractories solutions and refractories management services are aimed at customers in India and overseas. 152
5.3.1.2 Core Competencies: Knowledge innovation: Over the years, TRL has grown through changes — not just of products and processes, but also the business .The company’s innovation programme is inspired by two concepts namely, there is always a better way and secondly production of knowledge as priority. These two mantras have been internalised by all employees in order to achieve superior performance continuously. An intranet knowledge management site which captures, validates and stores knowledge, and also makes it available to users on demand, assists them in the process.
Product innovation: TRL has focused R & D for new product development, for formulating a groundbreaking material used for lining the inside walls of containers holding molten steel and has won an award at the Tata Innovation Day. It has the property of enhancing the life span of such containers by six times. The material was developed at a cost of Rs3.3 lakh but has the potential to generate savings of up to Rs35 lakh every month at a mid-sized steel plant.
Business innovation: The company’s global growth strategy is best exemplified by its recent foray into China. The Tata group’s first ever greenfield manufacturing facility in China — a 30,000 tons per annum (tpa) plant in Yingkou City for the production of mag carbon family of products — was inaugurated in December 2006. The primary drivers for this investment were the availability of magnesite in China and the need to manufacture and supply cost-effective mag-C
bricks
to
customers.
The project has provided the company with tremendous insights. There are 153
lessons to be learnt too. The project was executed in record time: it took only eight months .With change and innovation driving the company; it makes strategic sense for TRL to be looking at the global marketplace for its new growth muse. 5.3.2 IFGL Refractories Ltd(IRL) 5.3.2.1 Competitive advantage Rigid quality control: IRL operates with Quality Management System which complies with the requirements of BS EN ISO 9001-2000 and ISO 14001. The company guarantees good quality of products and has been trusted by user industries. The company is now selling well in China, also exporting to Japan, the USA, European countries, Vietnam, Malaysia, Singapore and other Southeast Asian countries. Technology absorption, adaptation and innovation: IRL imported from time to time technologies with consent of the collaborators for its own R & D. Technology imported- On-going technical support for refractory components of continous casting alumina graphite materials during the financial year 2005-2006.Technology imported knowhow for design, application, installation, reprocessing, commissioning, manufacture etc of Tube-Changer comprising of system and refractories during the financial year 2006-07. Technology imported know-how for design, manufacturing and application of round hole pressed filters and other refractory products mainly used in foundries during the financial year 200910.
Diversified product mix: With the changing steel making technologies ladle has become major consumer of refractories. IRL manufactures all types of refractory products 154
serving to ladle, tundish and furnace with state of the art technologies. Focus on global markets: IRL is focused on the global markets and has manufacturing units in UK, USA, Brazil, and China. Kandla plant is set up mainly for export purpose and has added advantage due to proximity to port. 5.3.2.2 Core Competencies Knowledge innovation: In September, 2010 IRL acquired EI Ceramics (EIC) and CUSU International Limited (CUSU), both Cincinnati, Ohio based companies engaged in manufacture of iso-statically pressed continuous casting refractories. Acquisition has created value for customers through utilizing the experience and knowledge of the partners and the personnel employed. Product innovation: IRL is the only refractory manufacturer in Orissa to produce bio ceramic products for health segment. A collaborative project has been undertaken with National Metallurgical Laboratory, Jamshedpur for development of Nanohydroxyapatite based Injectable Scaffold having applications in dental and orthopedic segments. Business innovation: IRL always making new business activities related to increase exports with development of new export markets for products and services like free on board (FOB)* value of exports for financial year 2009-2010 was Rs. 474.07 millions and for financial year 2010-2011 was Rs. 568.53 Millions. IRL received CAPEXIL award in recognition of exports for financial year 20092010. * Free on Board means that the seller pays for transportation of the goods to the port of shipment,plus loading cost. The buyer pays freight , insurance, unloading costs and transportation from the port of destination to the factory.
155
5.3.3 OCL India Ltd (OCL) 5.3.3.1 Competitive Advantage Harnessing the new and better sources of raw materials: OCL refractories started its first overseas venture by setting up a plant at Da Shi Qiao, in Liaoning province of China to tap the raw material and to keep pace with the demand for steel. A plant with the capacity of 20,000 million tons has been set up to manufacture magnesia-carbon bricks for use of LD Converter, Electric Arc Furnace(EAF), Ladle Furnace(LF). Technology absorption, adaptation and innovation: OCL refractories in collaboration with M/s TYK Corp., Japan has enhanced the technical capability to improve the quality of the product and to save energy saving and cost. For slide gate mechanism, OCL imported technology from TYK corporation, Japan during the financial year 2007-08. Rigid quality control: OCL is the first refractory company in India to be certified under ISO:9001 by TUVNORD of Germany for all its refractory products in 1994. OCL is certified with ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2001. New facilities have been added for manufacture of high alumina cement to ensure superior quality of precast and castable products. 5.3.3.2 Core competencies: Knowledge innovation: The Central Glass & Ceramic Research Institute (CGCRI), Kolkata, signed an MoU on 31st May 2008 with Dalmia Institute of Scientific and Industrial Research (DISIR) and OCL India Limited, both located at Rajgangpur of Sundergarh district in Orissa. Under the agreement, CGCRI has envisaged joint collaborative research work with DISIR on specific areas. The agreement detailed the modalities of collaboration, terms and conditions, 156
financial arrangements, intellectual property rights and obligations between the three signatories. The major features of the agreement are that the DISIR shall carry out research work for effective and expeditious implementation of agreement and coordinate the project between the parties, CGCRI will work on the project as per agreed priority for effective and expeditious implementation of the agreement, and DISIR and CGCRI will participate in industrial trials at OCL as and when required. Both DISIR and CGCRI have agreed to train authorized employees of either parties. Product innovation: OCL technology group has designed the Ladle shroud for a leading steel manufacturer like Durgapur steel plant , which resulted in the enhanced life from 3.5 heats to 9 heats in the period spanning from 2006 to 2008. This has led to 20% reduction in the consumption and tangible cost for steel industry. Business innovation: OCL is one among the leading refractory manufacturers of the world especially in the segment of Silica bricks for coke ovens and blast furnace stoves. It has extraordinary supply references all through the globe. OCL thrusts more on the exports of special refractories like continuous casting, slide plates & purging refractories for the steel sector, direct bonded magchrome bricks for the copper and fireclay & high alumina bricks for the aluminum sector. 5.3.4 SARVESH REFRACTORIES LTD 5.3.4.1 Competitive advantages: Manufacturing units located across India: The Sarvesh Group is presently having three refractory manufacturing units. The first unit is at Rourkela, second unit is at Gujarat and third unit is at Hyderabad. 157
Fastest delivery schedule in the industry: All the refractory plants have locational advantages with respect to the availability of raw materials. Nearness to port enables to import raw materials at a cheaper cost. Its units are equipped with necessary testing facilities and its quality control system ensures quality products delivered to the customer in time. Wide marketing and engineering support: Sarvesh refractories have an excellent network spread all over India that can channel its knowledge straight to customers. Special trained engineers with years of experience are always at hand to give suggestions, recommendations to customers providing various value added service like post installation service. 5.3.4.2 Core Competencies: Knowledge innovation: Sarvesh refractory has joined hands with the US-based UCAR Carbon Company for providing carbon-based refractory solutions to all manufacturers using blast furnace, including steel plants. Product innovation: UCAR refractory system has succeeded in the steel plants of Northern America. The company has made entry into the Chinese market with innovative and cost effective refractory products by increasing the life span of traditional blast furnaces in India from seven years to average minimum life span of 15 years. Business innovation: UCAR Carbon Company has authorised Sarvesh Refractory to market its entire range of carbon and graphite refractory products in India. It helps Sarvesh Refractory to meet the needs of the steel and allied industries located in India and overseas. 158
5.3.5 MANISHRI REFRACTORIES AND CERAMICS (P) LTD 5.3.5.1 Competitive advantages: Harnessing the new and better sources of raw materials: Manishri is located in the coastal belt of Orissa, a beautiful land with abundant natural resources, in Eastern India. It is mainly engaged in the production of refractory bricks, monolithic, precast shapes and specialties with upgraded manufacturing facilities. Moreover, the plant is situated in a close proximity to the Talbasta mines of Orissa, which are the best deposits of fireclay in India.
Wide Marketing and Engineering Support: Manishri covers all the major user industries in India and overseas with 5 marketing offices located in India and export agents in overseas market. Manishri has dedicated engineers and skilled professionals engaged in providing excellent service support to its valued customers. The company has 30 years of excellent design engineering exposure and by outstanding brand image in the market. 5.3.5.2 Core Competencies: Knowledge innovation: Through its innovative research and development practices, Manishri has been able to add new products to the existing ones. Manishri has strategic alliance with Research & Development Centre for Iron & Steel (RDCIS) at Ranchi and Central Glass & Ceramic Research Institute, (CGCRI) at Kolkata for continuous development and up-gradation of future generations of refractiories like nano refractories etc.
159
Product innovation: Manishri manufactures more than 500 brands of refractory products, each specially engineered to sustain individual heat resistant application in different user industries. Business innovation: Manishri plant is located very close to major steel plants like Rourkela Steel Plant, Durgapur Steel Plant, Bhilai Steel Plant, Viskhapatnam Steel Plant as well as National Aluminium Company Limited (NALCO) etc. The major advantage of the plant is to have
close proximity with 3 major ports
Vijag(Andhra Pradesh), Kolkata(West Bengal) and Paradeep(Odisha) which makes the company suitable for import and export of refractory products and services.
5.4 MAJOR GLOBALIZATION INITIATIVES FROM IRL AND TRL COMPANIES The key facets that differentiate truly global companies are their positioning in terms of assets, capabilities, brand and their relative resilience to shocks and even to business cycles. According to Ratan Tata of Tata group of companies, a company does not become global by simply participating in a certain number of geographical markets. In that sense it is not a sum of its parts. It is the company’s ability to become globally competitive, leverage global opportunities, and have the required global capabilities that makes it global.
The most important factor that influences business in recent times have been the possibilities thrown up by an increasingly globalized world economy (falling tariffs, easy flow of capital across borders, pressure on costs, outsourcing the possibilities of being part of a global supply chain and so on) 160
and the shifting nature of the home market (greater competition, falling consumer finance rates, less government intervention, etc…)
Today Indian companies have learnt how to cut costs and upgrade quality. The name India has become acceptable than before and Indian companies are making serious profits out of their global operations. Some of the best examples in going global for Indian manufacturing have been through acquisitions, moving up value chains and creating infrastructure outside India49. The small refractory players like OCL, Sarvesh and Manishri are yet to set up plants in foreign soil49.
STRATEGIES DEPLOYED IN THE GLOBALISATION PROCESS
Indian Refractory Manufacturers have adopted many strategies which enable them to meet the competition and thrive on a global scale. They can be placed in the following categories:
1. Seeking partnerships in the form of mergers, acquisitions, joint ventures, strategic alliances with foreign partners. When TRL merged with KHC they became one of the leading players in the global refractory market. 2. Expanding the scope of operations by getting into related products or services. 3. Entering niche markets with high degree of specialisation. Another strategy that companies are adopting these days to foray into the global markets is getting into the niche products.
49. Jearnet J.P and Hennessey D.H (2004),Global marketing strategies, Houghton Mifflin, Switzerland , PP: 586-587 161
4. Searching for new markets in countries hitherto unexplored. Indian companies have been focusing too much on the western world. But there are many opportunities for expansion in near shore locations like Russia, China, Malaysia, Singapore, Phillipines, Dubai etc. 5. Global supply chaining.
Refractory manufacturers have adopted the
practice of global supply chain. Continuous use of IT has enabled companies to use global supply chain to reduce costs and increase service levels. 6. Seeking infusion of foreign direct investment. etc. with convertibility laws coming into the country, India is now seeing infusion of capital from overseas. Such capital is sought in the form of global fund raising through financial instruments, investment of foreign companies in Indian equity, joint ventures and partnerships.
IRL’s Globalisation initiatives:
Table 23 (Vide Page 164) lists the IRL’s initiatives of global acquisitions of different companies in different locations. In 2005 , IRL acquired Monocon Group in September, 2005, with production facilities in the UK,USA, Brazil and China. The major acquisitions are Monocon International Refractories Limited and Monocon Overseas Limited located at United Kingdom(UK) for the production of products like darts capacity per annum with 240000 pcs and Monolithics capacity per annum with 30000 million tons. Mono Ceramics Inc located at USA for the production of product like lances capacity per annum with 12000 pcs.
162
Table 23. A global acquisition of IRL’s worldwide as on march/2011
Subsidiary
Country of Incorporation
Proportion of Ownership Interest
Subsidiary IFGL Worldwide Holdings Ltd
Isle of Man
100%
United Kingdom United Kingdom United Kingdom United States of America United Kingdom United States of America
100% 100% 100% 100% 100% 100%
Step down Subsidiaries IFGL Monocon Holdings Limited Monocon International Refractories Limited Goricon Metallurgical Services Limited Goricon LLC Monocon Overseas Limited Mono Ceramics Inc
Tianjin Monocon Refractories Co Limited Peoples Republic of China Tianjin Monocon Aluminious Refractories Co. Limited, PRC Peoples Republic of China Monotec Refratarios Ltda Brazil
100% 100% 95%
Source:www.ifglref.com,2011
To enhance the presence in the Brazilian market with Monotec Refractories Ltda with capacity of 6000 million tons per annum. IRL’s presence in China with Tianjin Monocon Aluminous Refractories Co Limited for manufacturing refractory darts capacity 180000 pcs per annum and Tianjin Monocon Aluminous Refractories Co Limited for manufacturing unshaped products with 24000 million tons per annum. In 2006, IRL acquired Garicon group with Goricon Metallurgical Services Limited located at UK and Goricon LLC at USA is engaged in manufacture of 163
darts, lances and ladle powders used in the steel industry. In September 2010 IRL,
acquired EI
Ceramics LLC (EIC) and
CUSC
International
Limited(CUSC), both based in Cincinnati (Ohio), USA. EIC is engaged in manufacture of Isostatically pressed Alumina Graphite Continuous Casting Refractories and CUSC is its ancillary unit. EIC is a prominent supplier of CC Refractories to steel industry in USA and Canada. Performance: During the financial year 2010-11, Monocon subsidiary registered net sales of Rs.116.08 Crore in compare to the financial year 2009-10 it was Rs.128.61 Crore, Rs.126.89 Crore in the financial year 2008-09 ,Rs.92.05 Crore in the financial year 2007-08 and Rs.101.54 Crore in the financial year 2006-07.
TRL’s Globalization initiatives: TRL China Ltd.Tata Refractories has set up a new plant in Bayuquan in north-east China to manufacture Magnesia Carbon Refractories. The new plant located at the chemical and metallurgical industrial park area in Bayuquan, Yingkou City of China is conveniently located about 40 kilometres from the sources of raw materials and 8 kilometres from the seaport to facilitate cost-effective transportation. It was set up with a capital investment of Rs. 27 crore. and a production capacity of 30,000 mil tons per annum(mtpa).. This strategic initiative has been taken to leverage the proximity to raw material sources and to avail the low-manufacturing-cost structure of the Chinese economy. This facilitates smooth supply of costeffective products to customers across the globe. TRL China Ltd is upscaling its magnesite-based refractory unit in Bayuquan in north-east China from the present 30,000 mil tons per annum (mtpa) to 90,000 mil tons per annum (mtpa.).The Greenfield plant, located at Bayuquan in Liaoning province situated in the north eastern part of China, is the first Greenfield 164
manufacturing unit of TRL as well as of Tata group in China. The plant was inaugurated by the company on December 28, 2006. The plant has been commissioned at a record time of exactly eight months, a record in project completion even by Chinese standards. Modernization and expansion were the strategic initiatives with a capital investment of Rs.282 crores, aimed to make TRL a global refractory company. This drive has resulted to make the company as one of the most modern plants to enhance its capacity of 2,50,000 MTPA to 3,80,000 MTPA, the highest for any refractory unit under one roof in the world. Performance TRL has two subsidiary companies viz. TRL Asia Private Limited , Singapore and TRL China Limited, Bayuquan a 100% Subsidiary of TRL Asia Private Limited. Company’s holding in TRL Asia Private Limited is 88%. TRL China started commercial operations from 28th December 2006. TRL China has earned a profit during the first full year of its operation. It has achieved a turnover of Rs.67 Crores and Profit before tax (PBT) of Rs.0.63 Crores. In order to meet market demands, TRL China is undertaking the Phase-II expansion of its production facilities in China with an estimated capital expenditure of Rs.14.95 Crores. 5.5 SWOT ANALYSIS OF REFRACTORY INDUSTRIES IN ORISSA
This section presents a SWOT analysis regarding the competitive position of the Refractory industries in Orissa as a platform for discussing strategic options to meet the identified challenges. SWOT is an abbreviation of Strengths, Weaknesses, Opportunities, and Threats. The four dimensions provide a framework for conducting a structured 165
analysis of the competitive situation of the refractory industries. The refractory sector has very different sub-sectors in terms of markets, products, distribution channels, etc. Large firms i.e. IRL,TRL,OCL and Sarvesh refractories tend to dominate the coarse refractory sub-sectors due to the need for economies of scale in production and high transportation costs. SMEs i.e. Manishri refractories are less able to compete in the competitive markets. SMEs dominate the fine refractory sub-sectors that very often supply high-quality, high-value specialised products to selected markets. The SWOTs affecting the competitive position are set out in the boxes below and each bullet is commented on and whenever possible related to specific sub-sectors. \
S-W FACTORS
STRENGTHS
WEAKNESSES
• Market Capacity: Refractory High Cost Producer : Refractory Industries
have
sufficient industries 60 % of the production
capacity to meet the future cost accounts from raw materials and energy, which have a direct
demand. • Strong Foothold in Stainless
impact on the profit margin.
Steel Sector: Steel industry is the
major
refractories.
consumption
of Delivery Compliance: Refractory manufacturers face problems in
• Plant Proximity to upcoming meeting the required specification Large Steel Cos: Many steel of goods to the customer at the companies in Orissa are located right time at right place due to 166
in and around Jharsuguda and constraints like, availability of raw Rourkela.
materials, logistics and skilled
• State-of
the-Art
Machineries:
Plant
Through
&
labors.
M&A Uniform
competitive
refractory industries have helped Refractory them
to
cater
with
technological
machineries
manufacture
products
Refractory
lack
in
new offering standardized products for to the
end
users
of marketing
international standards. • Total
industries
edge:
Solutions:
marketing
with
different
positioning mix
to
meet
and the
customer needs.
Refractory Industries provide Internal Customer Value Chain: refractory systems solutions with Refractory industries lacks proper the best price/performance ratio. • Global
Presence:
Refractory
industries are making presence in
interface at the all levels of the organization
like,
suppliers,
employees etc.
the global market through M & HRD Planning & Employee Retention: Refractory industries A. • Marketing Network: Refractory like Manishri with low margin are industries have an extensive not always able to invest in R & D marketing network in India and and manpower. abroad.
167
O-T FACTORS
OPPORTUNITIES
THREATS
• Unexplored export market:
• China
becoming
net
Refractory industries have a
exporter: China is the biggest
good opportunity to enter new
threat
export
South
industries in Orissa for making
Africa, EU, Middle East and
the product available with low
Far East including Malaysia
price per tons with better
and Indonesia.
quality of raw materials.
markets
like
to
all
refractory
• Unexplored user industries: Refractory industries can tap the
market
with
• Dumping
by
competitors:
growing
China is dumping sub-standard
demand from other sectors like
quality outputs in India at a low
sponge iron, copper and glass.
price.
• Consolidation: M & A of i.e.
• Increase average collection
Sarvesh with Raasi refractories
period of receivables: Longer
in
to
it takes for cash to be collected
consolidate among the top
from credit sales, the greater
manufacturer in Orissa.
cash flow difficulties faces
refractory
industries
Orissa
will
help
refractory • Increase in the Research and Technological (RTD) activities:
industries
i.e.
Manishri.
development • Short term delivery: Short 168
Research
and
technological
term delivery requirements by
development is important for
the
constant process and product
deprive
innovation.
manufacturers in Orissa to
customers the
sometimes refractory
loose the loyal customers due • Green Refractory
to delay in the supply of
Refractories: industries
finished goods.
can
manufacture green refractory products.
• Environmental
Legislation:
The refractory industries face environmental regulation in its energy use, on CO2 emissions, on pollution prevention, and on waste.
5.5.1 Strengths for the refractory manufacturers in Orissa
1. Market Capacity: Refractory Industries have sufficient capacity to meet the future demand. This is because greater the size of market share in terms of production capacity, greater is the profit for the organization. 2. Strong Foothold in Stainless Steel Sector: Steel industry is the major consumption of refractories. Therefore refractory industries concentrate in establishing as a long term solution provider to steel sector through Total Refractory Management (TRM). 169
3. Plant Proximity to upcoming Large Steel Cos: Many steel companies in Orissa are located in and around Jharsuguda and Rourkela, which are in close proximity to TRL, IRL and OCL . 4. State-of the-Art Plant & Machineries: Through M&A refractory industries have helped them to cater with new technological machineries to manufacture products of international standards. 5. Total Refractory Solutions: Refractory Industries provide refractory systems solutions with the best price/performance ratio. This enables all refractory users to add value to their production processes. 6. Global Presence: Refractory industries are making presence in the global market through M & A. Example TRL with KHC, Japan. 7. Marketing Network: Refractory industries like IRL,TRL and Sarvesh refractories have got operations in Kandla(Gujarat), Vizag(Andhra Pradesh) and China respectively to boast an extensive marketing network in India and abroad.
5.5.2 Opportunities for the refractory manufacturers in Orissa 1. Unexplored export market: Refractory industries have a good opportunity to enter new export markets like South Africa, EU, Middle East and Far East including Malaysia and Indonesia. Steelmaking capacity in the Middle East has grown from 32.3 million tpa in 2007 to 56 million tpa in 2010. 2. Unexplored user industries: Refractory industries can tap the market with growing demand from other sectors like sponge iron copper and glass. Demand of sponge iron has increased due to its use as a raw material for making steel in electric arc furnaces and induction furnaces. 3. Consolidation: M & A of refractory industries i.e. Sarvesh with Raasi refractories in Orissa will help to consolidate among the top manufacturer 170
in Orissa. 4. Increase in the Research and Technological development (RTD) activities: Research and technological development is important for constant process and product innovation. Examples are ceramics used to create cleaner technology in other sectors, nanotechnology and automation of processes. As mentioned above, it is closely linked to cleaner technologies but the continuous investment in RTD is necessary to maintain a competitive advantage in high-quality products. One important RTD activity will be to reduce the time-to-market for new products. 5. Green refractories: Refractory industries can manufacture green refractory products, to have better impact on the environment i.e. the bricks that consume less energy, fewer raw materials and emit less carbon. 5.5.3 Weaknesses for the refractory manufacturers in Orissa. 1. High cost producer : Refractory industries 60 % of the production cost accounts from raw materials and energy, which have a direct impact on the profit margin.
Remedial measures: TRL is currently exploring opportunities in advanced ceramics and assessing backward integration by producing synthetic raw materials. IRL has several manufacturing units across the globe in China, Brazil, UK and US to have easy accessibility of raw materials. OCL to tap the raw material and keeping pace with steel demand. It’s first overseas venture to set up a plant at Da Shi Qiao,in Liaoning province of China. Sarvesh refractories and Manishri refractories cost competency through 171
backward integration by processing raw material in their own rotary kilns. 2. Delivery Compliance: Refractory manufacturers face problems in meeting the required specification of goods to the customer at the right time at right place due to constraints like, availability of raw materials, logistics and skilled labors. Remedial measures: Refractory manufacturers should establish, develop and maintain long term business relationship with the user industries and suppliers. 3. Uniform competitive edge: Refractory industries lack in offering standardized products for the end users with different marketing positioning and marketing mix to meet the customer needs. Remedial measures: Refractory industries should go for collaboration with some of the world’s leading raw material producers, allowing to produce refractory products with exact characteristics demanded for each application. 4. Internal Customer Value Chain: Refractory industries lacks proper interface at the all levels of the organization like, suppliers, employees etc.
Remedial measures: The Refractory Companies i.e. TRL, OCL, IRL have an Internal Management audit team commensurate with size of the company. Manishri refractories and Sarvesh refractories should carry out desired level of audit to ensure that the laid down system and procedures are followed in the companies. 5. HRD Planning & Employee Retention: Refractory industries like Manishri with low margin are not always able to invest in R & D and manpower. 172
Remedial measures: The Research and Development Laboratory of TRL has been accorded the prestigious NABL Certificate of Accreditation. The (National Accreditation Board for Testing and Calibration Laboratories) NABL accreditation will enable TRL to deliver top line products to customers worldwide with 100 percent confidence in product quality certified. IRL has a partnership with Nippon Steel Group for Technology, Japan. This enables the company to command a stronger foothold in the industry in terms of superior technology when compared to other local peers. Global giants i.e. Vesuvius have similar strong technologies. OCL, Sarvesh refractories and Manishri refractories increase their efforts to maintain and develop a base of highly-skilled employees, for instance via targeted training programmes for low-skilled workers, investments in new education and training programmes, and efforts to improve the image of the sector among young people. 5.5.4 Threats for the refractory manufacturers in Odisha and its subsectors 1. China becoming net exporter: China is the biggest threat to all refractory industries in Orissa for making the product available with low price per tons with better quality of raw materials. Remedial measures: Refractory companies should go for in-house R&D to reduce costs and improve product performance.
2. Dumping by competitors: China is dumping sub-standard quality outputs in India at a low price. Remedial measures: Exports of cheaper refractory bricks from China to India can be restricted by 173
instituting anti-dumping duties against such Chinese-sourced products. 3. Increase average collection period of receivables: Longer it takes for cash to be collected from credit sales, the greater cash flow difficulties faces refractory industries i.e. Manishri. Remedial measures: Refractory companies i.e. Manishri refractories with increase average collection period of receivables have become the major concern. The companies have to take necessary steps in increasing the efficiency of debt collection to tighten the credit policy. 4. Short term delivery: Short term delivery requirements by the customers sometimes deprive the refractory manufacturers in Orissa to loose the loyal customers due to delay in the supply of finished goods. Remedial measures: Refractory companies i.e. Sarvesh refractories and Manishri refractories should go for extensive marketing and distribution network around the world, enable to market and distribute products efficiently. 5. Environmental Legislation: The refractory industries face environmental regulation in its energy use, on CO2 emissions, on pollution prevention, and on waste. Remedial measures: Environmental legislation is a major cost component in more sub-sectors. Energy efficiency has improved over the years and at least in the short term it is difficult for ceramics producers to comply with the Orissa Pollution Control Board (OPCB) directive. Refractory industries in Odisha are energy intensive in the production phase but it is worth noting that, from a lifecycle perspective, the sector produces products that last for a very long time and this increases the overall energy efficiency of the products.
174
5.6 ANALYSIS OF GLOBAL REFRACTORY MARKET
Refractory technology has advanced along with ceramic and metal processing technology over the centuries. Recently, dramatic improvements have occurred with regard to use of refractory in steelmaking. In 1970, refractory consumption was about 30 to 50 pounds per ton of steel produced; by 2007, the range was 10 to 20 pounds and was even less than 10 pounds in some of the efficient plants. Technologies in the production of nonferrous metals, glass, and
cement
have
also
progressed
by
the
time.
The decrease in refractory consumption is offset in part by higher prices, especially in highly industrialized nations. For example, in Germany, the average price of refractory materials moved from $710 per ton in 2002 to $840 in 2007. In Japan, the corresponding figure for 2007 was put at $960 per ton. At the global level, price changes come slowly, however, from $600 in both 2002 and in 2007 to an estimated $630 in 2012. The explanation lies in China's dominant role where prices of refractory materials are truly low, about $450 per ton on average in 2007, with a projected increase to $495 in 2017. China has a vast supply of requisite materials and low labor costs; energy prices have also been kept low until now. The country is the dominant player in this field. Countries like the United States, Japan, Russia. Germany, and Brazil and other developing/industrialising nations may also assume a greater role in future.
5.6.1 COUNTRY PROFILE-RUSSIA The Russian Federation is the dominant nation in Eastern Europe and has shown much resilience in the past 10 years. However, it is still struggling with substantial economic and political challenges. With a demand of $1.4 billion 175
for refractory materials, Russia accounted for over one half of regional sales in 2007. Details on Russia's refractory demand and supply situation are shown in Table 24. Intensity of product use, gauged against steel production, is
Table 24. Russia: Refractory Demand and Supply, 2002-12 Item
2002
2007
2012
2007/20
2012/20
Steel production(mil met tons)
59.8
72.2
83.4
02 3.8
07 2.9
Refractory demand(000 met.
1,695
1,945
2,150
2.8
2.0
Refractory demand(mil $)
1,050
1,380
1,700
5.6
4.3
Net exports (mil $)
40
60
80
8.5
5.9
tons)
Refractory demand by form (000 met. tons) Bricks and shapes
1,025
1,165
1,280
2.6
2.1
Monolithics and other
670
780
870
3.1
2.2
Refractory demand by material (000 met. tons) Clay
1,000
1,165
1,290
3.1
2.2
Nonclay
695
780
860
2.4
2.0
Refractory demand by market (000 met. tons) Steel
900
1,010
1,080
2.3
1.4
Other metals
255
290
325
2.6
2.3
Nonmetallic materials
155
195
245
4.7
4.7
Other
385
450
500
3.2
2.2
Source: The Freedonia Group
above the world average, bolstered by the use of open hearth furnaces in the steelmaking sector. Industry growth kept pace with domestic demand in recent years, and Russia is now a small, but definite net exporter of refractory materials to its neighbors and even to Western Europe and Asia-Pacific. Refractory demand in Russia rise at 4.3 percent i.e. $1.7 billion and at 2.0 percent in tonnage i.e. 2.2 million metric tons in 2012. The progress of 176
refractory industries in Russia will be stimulated by acceleration in manufacturing, rising flat glass and cement production. However, slower growth in steel production will be a limiting factor. There is bound to be competition from foreign suppliers like Materis, France and Vesuvius, Austria are two major multinational producers with plants here, whereas Imeris, Clayburn and others have sales offices.
5.6.2 RHI GROUP
RHI AG is a globally operating refractory group based in Vienna, Austria with 30 production sites and employs 7,925 people worldwide in 2011. RHI core activities in 2000 were focused mainly on refractory, water proofing, engineering and insulating. 2005 onward RHI concentrated only on the refractory and insulating business. In 2008, RHI forms the single core business refractory division. Fig 19 illustrates RHI’ core business activities.
Fig 19: RHI Share in the core activities
WWW.RHI-AG.COM,2011
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5.6.2.1 RHI ACTIVITIES
Fig 20 illustrates worldwide presence of RHI in China, India, South Africa and USA with new plant and capacities that have helped to improve the market presence along with cost structure.
Fig No 20: RHI plant setup worldwide (2011)
Source:www.rhi-ag.com RHI’s motive behind new plants in different locations in world is to add a competitive advantage for competing in different markets with cost effective refractory by lowering the cost of production.RHI has set up its own sintering kilns and melting reactors to provide half of the required raw material like, magnesite mined in Austria, Turkey and Italy for in-house production of finished goods. 178
5.6.2.2 RHI’S GROWTH POTENTIAL IN BRIC.
RHI’s market potential has been Brazil, Russia, India and China (BRIC). Brazil and Russia has been an attractive growth market for RHI due to the growth of steel industry. Presence of RHI Clasil in India as the strongest refractory importer stands as the biggest threat for local refractory makers. RHI has also positioned itself well in China with Monofrax to capture the market potential for the increased demand of high grade refractories. It has set up its plants in Mexico, Canada and China to have strong local presence in the glass segment. RHI has already established themselves in several other emerging markets such as Egypt, Indonesia,
Philippines, Turkey and
Vietnam.
5.6.2.3 ESTABLISHED BRANDS OF RHI:
Fig 21. Illustrates RHI’s established brands like Radex, Monofrax, Interstop, Dolomite Franchi and Didier to market refractory.
Fig 21.: RHI’s established brands
Sources: www.rhi-ag.com,2011 179
5.6.3 VESUVIUS REFRACTORY
Vesuvius is part of the Cookson group established in Austria. It is one among the world’s leading refractory solution providers. Vesuvius has made market presence in India by offering value-added services and total refractory management services (TRMs) with technological superior products in comparison to other refractory manufacturers. TRM is the total refractory solution package, starting from engineering material supply, installation , assembling, up to maintenance. Vesuvius’s target market in India has been steel industry, which is the primary consumer of refractory.
CHAPTER 6 6.1 MARKETING OF REFRACTORY PRODUCTS: Marketing is "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large."50 However marketing cannot be kept apart and the Product, Pricing, Placement and promotions of the product ultimately depends on the marketing function. Thus with the customer as a controller, marketing becomes a major integrative function of the organization. A marketing firm must ascertain the nature of customers' buying behavior if it is to market its product properly. In order to entice and persuade a consumer to buy a product, marketers try to determine the behavioral process of how a given product is purchased. 50.http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx
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Buying behavior is usually split into two prime strands, whether selling to the consumer, known as business-to-consumer (B2C), or to another business, known as business-to-business (B2B). People have their own unique perceptions of the world based on their belief system. The most innovative idea, the greatest product, or a superior service succeeds only when the same is marketed within the context of people's perceptions i.e. their needs, want, solution to their problems or improvement in the situation etc. But manufacturers need to be aware of many other contexts, such as social and economic trends or governmental regulations. People don't just "buy" a product. They "buy" the concept of what that product will do for them, or help them do for themselves e.g people who are overweight don't just join a franchise diet center to take pre-packaged micro-meals. They "buy" the concept of a new, thin, happy and successful self. It is also necessary for the marketers to predict the future based on the past study. It reveals what people have done, and extrapolates what people might do -- not what people will do. Planning is imperative, research is important, but there's no substitute for entrepreneurial insight. Marketing division in refractory industries play important role to procure orders from the new and existing customers. The customer place orders based on the trail order or repeated order based on the quantity required. The following are the ordering procedures: Drawings: The marketing personnel from refractory companies survey carefully to the application, dependent on the type of furnace or processing unit, operating temperatures, exposure to abrasion, and a range of other variables. Based on the feedback from the personnel the manufacturer shall prepare the drawing at their own cost for the approval from the customer. So prior approval of 181
drawing to be done by the manufacturer before issuing purchase order to the customer. Advice note/ Release note: The manufacturers shall ensure that every advice note or release note shall bear the customer’s purchase order number and item numbers. The manufacturers shall either send advice notes to the address specified in the headings of the purchase order by separate post on the date the goods are dispatched or services performed (and) or a packing note shall accompany the delivery of any goods. Delivery: 1. The manufacturer shall deliver the goods carriage paid (unless otherwise stated in the purchase order) to the point of delivery specified on the purchase order. 2. The manufacturer shall deliver the goods and/or perform the services on the date specified on the purchase order and the time of such delivery or performance shall be of the essence of the contract. Price and payment: 1. All prices are inclusive of the FOB, cost of carriage, insurance, import duties and taxes, VAT (if applicable) and any other applicable duties and taxes and are not subject to escalation. 2. The customer shall pay the manufacturer’s invoice within 60 days of the end of the month in which it was received by the customer. 3. The customer shall pay for the goods and/or services in the currency stated on the purchase order based on the spot rate or forward rate.
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Packaging materials: Refractory products agreed in writing, packing cases, boxes, drums, pallets and/or packing materials will not be paid for by the customer. It is the responsibility of the manufacturer to collect any packing cases, boxes, drums, pallets and/or packing materials within a reasonable time after delivery. The manufacturer shall so pack the goods that they shall be safe and secure in transit by rail, road, air or ship. The manufacturer shall promptly reimburse to the customer all additional costs reasonably incurred by the customer as a result of any inadequate packaging of the goods. The manufacturer shall ensure that any package or crate containing the goods shows clearly, on the outside thereof country of origin and the manufacturer’s order number. Order of execution of work: The customer shall complete the contract by the time stated. The manufacturer shall submit detailed work programmes and progress reports monthly or as the customer may from time to time require. Inspection, testing and quality: Goods shall be of first class quality, new and shall be supplied strictly in accordance with the qualities, drawings, specifications, standards and stipulations contained in the contract and, unless otherwise agreed in writing, shall conform to all relevant standards, legislation, specifications and conditions and all work and services performed by the customer shall be in accordance with best practice.
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6.1.1 TYPES OF MARKETING If one talks about all the new forms of marketing a company can pursue, it is true, certain traditional marketing has been around for a long time and is still used today, but with the internet now playing such a huge role in any company’s success, companies are coming out with more and more ways to market their products or services. The following discussion attempts to throw some light on different types of marketing usually used by today’s companies to market their products or services. Online Marketing Online marketing is referred to as Internet marketing. It encompasses a variety of marketing forms like video advertisements, search engine marketing and e-mail marketing. Online marketing is the opposite of offline marketing, and can also fall under digital marketing. Online marketing needs a good approach in areas of design, development and advertising. A company with a total web site marketing plan will have more success online than one that has just designed a web site without thinking of how to market their company through it. Offline Marketing Offline marketing, the opposite of online marketing, includes all forms of marketing that aren’t done on the Internet. Examples of offline marketing are local advertising in newspapers and on television. In today’s marketing world, companies are finding ways to leverage their offline marketing campaigns with their online ones, making them complement to each other.
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Outbound Marketing Outbound marketing is known as traditional marketing. In fact, the majority of companies today are using different types of outbound marketing to reach their potential customers. Outbound marketing includes any marketing efforts that are taken to introduce a product or service to someone who isn’t looking for that product or service. Some examples are cold calling, sending newsletters, billboards, and banner ads on popular web sites like, Yahoo, Facebook. Inbound Marketing Inbound marketing is the marketing directly to customers through search engine marketing. The important thing to remember here is that a person starts out with the want/need to purchase a product or service, and they go out to find it. When they search for that product/service on a search engine, the search engine results page will show inbound marketing results. Instead of using paid advertisements, inbound marketing is the search engine optimization (SEO) part of web marketing. Newsletter Marketing Newsletter marketing is the direct mails send out on a regular basis to a list of subscribers, customers through emails. Typically, a firm using newsletter marketing will have a group of contacts used to send a newsletter containing some interesting information. The success of newsletter marketing depends on grabbing attention, writing good content and reaching a large number of potential clients.
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Article Marketing Businessmen often write articles related to the industry they are in and distribute them online and offline. Free articles inform people about an important topic and give the company’s credibility within the market. The organizations can also include their business contact information in the article, allowing them to get new clients. Trade Show Marketing Companies wanting to reach large number of potential customers can participate in public or private trade shows. Trade shows and other forms of event marketing are often a large investment to participate. However, it allows companies to demonstrate new products and services to examine the trends going on in the market presently. Search Marketing Search engine marketing (SEM) is the way in which companies promote their business through paid placement on search engines like Google, Yahoo, Bing, Ask. Companies will pay to have their advertisements in the sponsored section of search engines to have better ranking in the search engines.
Direct Marketing Direct marketing’s main goal is to send a message directly to consumers, without using any third party outlets. Examples of direct marketing include mail marketing, telemarketing and direct selling. Direct marketing is often preferable because the results can be easily measured, giving the marketer a better understanding of the success of that campaign. 186
Niche Marketing When a product or service is not being readily supplied to a certain portion of a market, a company can focus its efforts on that market to address a need that isn’t currently being addressed. This targeted marketing is successful because the marketer has identified a need that isn’t being resolved by mainstream providers. Sometimes it is beneficial for a company to focus on a market instead of trying to compete in a larger market. Refractory industries catering to niche markets, such as monolithics, dolomite bricks, silicon bricks and flow control refractories. Drip marketing Drip marketing is the act of sending out scheduled targeted emails that are all coordinated to a specific goal of client conversion. The sender uses email marketing software that allows them to setup multiple emails at one time and let them “drip” over time. This sometimes includes phone calls to check in on the clients along the way. Social Media Marketing Social network marketing and social media campaigns provide a window to market a product or service on the internet through different social networks. Companies can use outlets for their marketing, customer service and sales. The most common and successful means of social media marketing are found on sites like Facebook, Twitter, LinkedIn, YouTube and even company blogs. Referral Marketing One of the less strategic types of marketing, referral marketing relies on a company’s customers to refer new customers to that company. Also known as 187
word of mouth marketing, this is a more spontaneous way of receiving new business, and can not be solely relied on because results aren’t very predictable. However, word of mouth is still a powerful part of a company’s efforts to bring in new business, especially in the social media community where communication travels freely. Guerrilla Marketing With a smaller budget, guerrilla marketing makes a splash by relying on energy, timing and unusual approaches to get the consumer’s attention. The unconventional marketing tries to get the most out something small, and make a lasting brand image in the consumer’s mind. Refractory industries have established a long term relationship with the customer through Total Refractory Management (TRM) contract. Promotional Marketing Promotional marketing is a common form of marketing strategy that companies use to motivate consumers to make a decision and purchase their product. There are a number of ways that businesses will promote a product or service, including holding contests to win a prize, offering coupons for purchasing a product at a discount, and having samples of the product so that people can experience the same before their purchase. Affiliate Marketing Affiliate marketing most likely involves four different groups like website holder, network, publisher and customer that contribute to the marketing effort. Merchant is the company that is producing and selling the product, Network is the outlet that is used to promote an affiliate link, the Publisher or Affiliate is the person who has the website with the affiliate advertisement 188
and of course is purchased by the customer. Affiliate links are found on all types of websites, and they are used to drive traffic to outside websites. Customers are created through multi level marketing network like, Amway. Viral Marketing This type of marketing relies on the message of a marketer being spread quickly through various social networks to increase brand awareness. The name viral marketing stems from the rapid spread of viruses in general. Typically, a viral marketing campaign will not last as long as other marketing efforts, but if a company comes up with a good idea and reaches the right people, it becomes highly successful in a short span of time. B2B Marketing Any type of business, whether an organization, individual, government or other institution that markets to other businesses is involved in business to business marketing. Since B2B marketing involves companies trying to sell mass quantities of product to one another, there is a more personal relationship that needs to be established between businesses. If one company sells to other businesses, the marketing efforts will most likely be more direct. B2C Marketing Business to consumer marketing campaign tries to reach a category of people likely to purchase product or service. The marketing efforts of the company should be broader than B2B, which focuses on specific companies. B2C marketing can involve different marketing techniques such as door to door marketing, promotion marketing, newspaper marketing, television marketing and radio marketing. In today’s marketing world, B2C Internet marketing is becoming more important to reach consumers. 189
Mobile Marketing Along with Internet marketing, mobile marketing is part of the newest groups of marketing activities. Companies have been experimenting with the certain ways to reach consumers through their phones, especially with the rise of Apple’s iphone. Some ways to marketing a product or service through a mobile phone include SMS marketing, in-game marketing, banner marketing on different web pages and location based marketing. Reverse Marketing Reverse marketing is the concept of making the customer seek the firm rather than marketers seeking the customer. Reverse marketing is also known as advertising marketing.Traditionally marketing involves things like TV spots, print ads, or other methods companies actively do to attract customers for their product or service. An example of reverse marketing would be companies that sells water purifiers, and adds to their web site a long E-book or essay about subjects that potential customers are searching for on search engines. Telemarketing A form of direct marketing, telemarketing’s focus is on reaching consumers by phone. Most of what we think of as telemarketing is cold call marketing, which is unpopular and has led to laws being created against it. However, telemarketing can be effective if the right person is reached the phone at the right time.
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Direct Mail Marketing Most people receive large quantities of marketing material in the mail, which is considered direct mail marketing. Companies will send paper mail with promotions or other information to a list of addresses, usually in a common geographical area. This form of marketing is also called junk mail by some, because the customers receiving the mail aren’t expecting it and usually don’t want to open it. Database Marketing Database marketing is similar to other types of direct marketing, but the focus is more directed towards analyzing data. Companies try to narrow their marketing efforts down to certain groups of people, and they use database marketing to analyze information’s like, name, address, or sales history, in order to create the most accurate model possible. Personalized marketing The goal of personalized marketing is to create a unique offer for each individual customer. This form of marketing doesn’t work for every company, but certain ones can capitalize on their unique products and customer demographics to market to individuals. With the Internet becoming a more popular place for marketing, companies are finding that personalized marketing is effective in cases when they can track customer’s specific interests and send them more information for future suggestions. Business Marketing is the practice of individuals, or organizations, including commercial businesses, governments and institutions, facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use 191
them to support their operations. 6.1.2 THE INTERNET AND B2B MARKETING (INDUSTRIAL) The "dotcom" boom of the late 90's saw significant attempts to develop a new retailing business model; i.e. on-line shopping. Many entrepreneurs (and their investors) discovered that merely having a website (no matter how innovative) was insufficient to generate sales; the amount of conventional mass media advertising is required to promote the sites burnt cash at a faster rate than they could generate through on-line sales. They also presumed that consumers would eschew the irksome shopping experience (driving, parking, poor service etc.) for the wonder and convenience of shopping on-line. Some did; but not in sufficient numbers. There were many unforeseen problems and apart from some notable exceptions (Amazon.com and others) the B2C online model was a spectacular failure. However, the same cannot be said of B2B selling where some impressive results have not been achieved. For Small and Medium sized companies (SMEs) it is very important that they use their promotional campaign budget very intelligently. Here every rupee spent on promotional activities counts and unless they are fully aware of their potential customers, they will stand to lose out and thus may render the campaign a total failure. SMEs need to realize and understand that to get maximum online exposure they have another good option by becoming members of various business to business (B2B) portals which will not only give the cost advantages to SMEs, but they also offer features and support services that are customized for international trade and provide an efficient way to promote products directly to potential buyers. Many SME’s i.e Sarvesh Refractories and Manishri Refractories fail to understand the importance of taking professional help in marketing their products which many times proves more cost effective rather than they doing 192
it them selves. It not only proves to be effective in reaching the "RIGHT" target audience in the shortest possible time with minimum investment but also enables them to be way ahead of their competition in reaching newer markets. It can also ensure that SME’s can focus on the core competencies where by outsourcing the other non core activities to international business experts who can do the hunting for newer markets for them. They can enable refractory industries to identify and develop the Unique Selling Point (USP) of their products / services and can also help to develop clear business plans and set targets for long term growth. Although industrial market research has generated large data banks on organizational buyers, very little from the existing data seems helpful to the management. What is needed before data are collected is to understand the process of Industrial buying decisions .The Industrial Buyer Behavior Model described at page will be useful in the following ways : first , to broaden the vision of research on organizational buyer behavior so that it includes the most salient elements
and their
interactions; second, to act as catalyst building marketing information systems from the view point of the industrial buyer; and , third to generate new hypotheses for future research on fundamental processes underlying organizational buyer behavior. The model of industrial buyer behavior is summarized in Figure 22 (Vide Page 194). This illustrative presentation looks complex due to the large number of variables and complicated relationships among them. This is because it is a generic model which attempts to describe and explain all types of industrial buying decisions. The actual application of the model in a specific study can also be simplified in at least two ways. First, several variables are included as conditions to hold constant differences among types of products to be purchased (product-specific factors) and differences among types of purchasing organizations(company-specific factors). 193
These factors (product and company specific factors) will not be necessary if the objective of a study is to describe the process of buying behavior for a specific product or service. Second, some of the decision-process variables can also be ignored if the interest is strictly to conduct a survey of static measurement of the psychology of the organizational buyers.
Fig 22. Industrial buyer Behavior Model
Source:John A Howard,Jagdish Sheth. The Theory of Buyer Behaviour, John Wiley, 1969
Organizational buyer behavior consists of three distinct aspects. The first 194
aspect is the psychological world of the individuals involved in organizational buying decisions. The second aspect relates to the conditions which precipitate joint decisions among these individuals. The final aspect is the process of joint decision making with the inevitable conflict among the decision makers and its resolution by resorting to a variety of tactics. Many industrial buying decisions are not solely in the hands of purchasing agents. Typically in an industrial setting, one finds that there are at least three departments whose members are continuously involved in different phases of the buying process. The most common are the personnel from the purchasing, quality control, and manufacturing departments. These individuals are identified in the model as purchasing agents, engineers, and users. Several other individuals in the organization may be, but are typically not, involved in the buying process. Therefore individuals mentioned above have continuous interaction among themselves in the buying process and often they take joint decisions . It is, therefore, critical to examine the similarities and differences in the psychological worlds of these individuals. Based on research in consumer and social psychology, several different aspects of the psychology of the decision makers are included in the model. Primary among these are the expectations of the decision makers about suppliers and brands [(1) in Figure 11]. The present model specifies five different processes which create differential expectations among the individuals involved in the purchasing process: (la) the background of the individuals, (lb) information sources, (lc) active search, (Id) perceptual distortion, and (le) satisfaction with past purchases. These variables have been explained and operationally defined below to fully represent the psychological world of the organizational buyers.
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Expectations Expectations refer to the perceived potential of alternative suppliers and brands to satisfy a number of explicit and implicit objectives in any particular buying decision. The most common explicit objectives include, in order of relative importance, product quality, delivery time, quantity of supply, aftersale service where appropriate, and price.' However, a number of studies have pointed out the critical role of several implicit criteria such as reputation, size, location, and reciprocity relationship with the supplier and personality, technical expertise, salesmanship, and even life style of the sales representative. In fact, with the standardized marketing mix among the suppliers in oligopolistic markets, the implicit criteria are becoming marginally more and more significant in the industrial buyer's decisions.
Expectations can be measured by obtaining a profile of each supplier or brand as to how satisfactory it is perceived to be in enabling the decision maker to achieve his explicit and implicit objectives. Expectations will substantially differ among the purchasing agents, engineers, and product users because each considers different criteria to be salient in judging the supplier or the brand. In general, it is found that product users look for prompt delivery, proper installation, and efficient serviceability; purchasing agents look for maximum price advantage and economy in shipping and forwarding; and engineers look for excellence in quality, standardization of the product, and engineering retesting of the product. Background of Individuals The first, and probably most significant, factor is the background and task orientation of each of the individuals involved in the buying process. The different educational backgrounds of the purchasing agents, engineers, and plant managers often generate substantially different professional goals and 196
values. In addition, the task expectations also generate conflicting perceptions of one another's role in the organization. Finally, the personal life styles of individual decision makers play an important role in developing differential expectations. It is relatively easy to gather information on this background factor. The educational and task differences are comparable to demographics in consumer behavior, and life style differences can be assessed by psychographic scales on the individual's interests, activities, and values as a professional. Information Sources and Active Search The second and third factors in creating differential expectations are the source and type of information each of the decision makers is exposed to and his participation
in
the
active
search.
Purchasing
agents receive
disproportionately greater exposure to commercial sources, and the information is often partial and biased toward the supplier or the brand. In some companies, it is even a common practice to discourage sales representatives from talking directly to the engineering or production personnel.
The engineering and production personnel, therefore, typically have less information and what they have is obtained primarily from professional meetings, trade reports, and even word-of- mouth. In addition, the active search for information is often relegated to the purchasing agents because it is presumed to be their job responsibility. Perceptual Distortion A fourth factor is the selective distortion and retention of available information. Each individual strives to make the objective information consistent with prior knowledge and expectations by systematically distorting 197
it. For example, since there are substantial differences in the goals and values of purchasing agents, engineers, and production personnel, one should expect different interpretations of the same information among them. One possible approach is experimentation, but this is costly. A more realistic alternative is to utilize perceptual mapping techniques such as multidimensional scaling or factor analysis and compare differences in the judgments of the purchasing agents, engineers, and production personnel to a common list of suppliers or brands. Satisfaction with Past Purchases The fifth factor which creates differential expectations among the various individuals involved in the purchasing process is the satisfaction with past buying experiences with a supplier or brand. Often it is not possible for a supplier or brand to provide equal satisfaction to the three parties because each one has different goals or criteria. For example, a supplier may be lower in price but his delivery schedule may not be satisfactory. Similarly, a product's quality may be excellent but its price may be higher than others. The organization typically rewards each individual for excellent performance in his specialized skills, so the purchasing agent is rewarded for economy the engineer for quality control and the production personnel for efficient scheduling. This often results in a different level of satisfaction for each of the parties involved even though the chosen supplier or brand may be the best feasible alternative in terms of overall corporate goals.
Past experiences with a supplier or brand, summarized in the satisfaction variable, directly influence the person's expectations toward that supplier or brand. It is relatively easy to measure the satisfaction variable by obtaining information on how the supplier or brand is perceived by each of the three parties. 198
Determinants of Joint vs. Autonomous Decisions Not all industrial buying decisions are taken jointly by the various individuals involved in the purchasing process. Sometimes the buying decisions are delegated to one party, which is not necessarily the purchasing agent. It is, therefore, important for the supplier to know whether a buying decision is joint or autonomous and, if it is the latter, to which party it is delegated. There are six primary factors which determine whether a specific buying decision will be joint or autonomous. Three of these factors are related to the characteristics of the product or service (2a) and the other three are related to the characteristics of the buyer company (2b). Product-Specific Factors The first product-specific variable is perceived risk in buying decisions. Perceived risk refers to the magnitude of adverse consequences felt by the decision maker if he/she makes a wrong choice, and the uncertainty under which he/she must decide. The greater the uncertainty in a buying situation, the greater the perceived risk. Although there is very little direct evidence, it is logical to hypothesize that the greater the perceived risk in a specific buying decision, the more likely it is that the purchase will be decided jointly by all parties concerned. The second product-specific factor is type of purchase. If it is the first purchase or a once-in-a-lifetime capital expenditure, one would expect greater joint decision making. On the other hand, if the purchase decision is repetitive and routine or is limited to maintenance products or services, the buying decision is likely to be delegated to one party. The third factor is time pressure. If the buying decision has to be taken under a great deal of time pressure or on an emergency basis, it is likely to be delegated to one party rather than decided jointly
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Company specific factors The three organization-specific factors are company orientation, company size, and degree of centralization. If the company is technology oriented, it is likely to be dominated by the engineering people and the buying decisions will, in essence, be taken by them. Similarly, company is production oriented; the buying decisions will be taken by the production personnel. Second, if the company is a large corporation, decision making will tend to be joint. Finally, the greater the degree of centralization, the less likely it is that the decisions will be joint. Thus, a privately-owned small company with technology or production orientation will tend toward autonomous decision making and a large-scale public corporation with greater decentralization will tend to have greater joint decision making. Process of Joint Decision Making The major thrust of the present model of industrial buying decisions is to investigate the process of joint decision making. This includes initiation of the decision to buy, gathering of information, evaluating alternative suppliers, and resolving conflict among the parties who must jointly decide. The decision to buy is usually initiated by a continued need of supply or is the outcome of long-range planning. The formal initiation in the first case is typically from the production personnel by way of a requisition slip. The latter usually is a formal recommendation from the planning unit to an ad hoc committee consisting of the purchasing agent, the engineer, and the plant manager. The information-gathering function is typically relegated to the purchasing agent. If the purchase is a repetitive decision for standard items, there is very little information gathering. Usually the purchasing agent contacts the preferred supplier and orders the items on the requisition slip. However, considerable active search effort is manifested for capital expenditure items, especially those which are entirely new purchase experiences for the organization. 200
The most important aspect of the joint decision-making process, however, is the assimilation of information, deliberations on it, and the consequent conflict which most joint decisions entail. Interdepartmental conflict in itself is not necessarily bad. What matters most from the organization's viewpoint is how the conflict is resolved (3). If it is resolved in a rational manner, it is hoped that the final joint decision will also tend to be rational. If, on the other hand, conflict resolution degenerates to "tactics of lateral relationship,(1) the organization will suffer from inefficiency and the joint decisions may be reduced to bargaining and politicking among the parties involved. Not only will the decision be based on irrational criteria, but the choice of a supplier may be to the detriment of the buying organization.
What types of conflict can be expected in industrial buying decisions? How are they likely to be resolved? These are some of the key questions in an understanding of industrial buyer behavior. If the inter-party conflict is largely due to disagreements on expectations about the suppliers or their brands, it is likely that the conflict will be resolved in the problem-solving manner. The immediate consequence of this type of conflict is to actively search for more information, deliberate more on available information, and often to seek out other suppliers not seriously considered before. The additional information is then presented in a problem-solving fashion so that conflict tends to be minimized. If the conflict among the parties is primarily due to disagreement on some specific criteria with which to evaluate suppliers—although there is an agreement on the buying goals or objectives at a more fundamental level—it is likely to be resolved by persuasion. An attempt is made, under this type of resolution, to persuade the dissenting member by pointing out the importance of overall corporate objectives and how his/her criterion is not likely to attain 201
these objectives. There is no attempt to gather more information. However, there results greater interaction and communication among the parties, and sometimes an outsider is brought in to reconcile the differences.
Both problem solving and persuasion are rational and useful methods of conflict resolution. The resulting joint decisions, therefore, also tend to be more rational. Thus, conflicts produced due to disagreements on expectations about the suppliers or on a specific criterion are healthy from the organization's viewpoint even though they may be time consuming. A more typical situation in which conflict arises is due to fundamental differences in buying goals or objectives among the various parties. This is especially true with respect to unique or new buying decisions related to capital expenditure items. The conflict is resolved not by changing the differences in relative importance of the buying goals or objectives of the individuals involved, but by the process of bargaining. The fundamental differences among the parties are implicitly conceded by all the members and the concept of distributive justice (tit for tat) is invoked as a part of bargaining. Finally, if the disagreement is not simply with respect to buying goals or objectives but also with respect to style of decision making, the conflict tends to be grave and borders on the mutual dislike of personalities among the individual decision makers. The resolution of this type of conflict is usually by politicking and back-stabbing tactics. Such methods of conflict resolution are common in industrial buying decisions. Both bargaining and politicking are non-rational and inefficient methods of conflict resolution; the buying organization suffers from these conflicts. Furthermore, the decision makers find themselves sinking below their professional, managerial role. The decisions are not only delayed but tend to be governed by factors other than achievement of corporate objectives. 202
Critical Role of Situational Factors The model described so far presumes that the choice of a supplier or brand is the outcome of a systematic decision-making process in the organizational setting. However, industrial buying decisions are determined by ad hoc situational -factors (4) and not by any systematic decision- making process. In other words, similar to consumer behavior, the industrial buyers often decide on factors other than rational or realistic criteria.
It is difficult to prepare a list of ad hoc conditions which determine industrial buyer behavior without decision making. However, a number of situational factors which often intervene between the actual choice and any prior decision-making process can be isolated. These include: temporary economic conditions such as price controls, recession, or foreign trade; internal strikes, walkouts, machine breakdowns, and other production-related events; organizational changes such as merger or acquisition; and ad hoc changes in the market place, such as promotional efforts, new product introduction, price changes, and so on, in the supplier industries.
Implications for Industrial Marketing Research The model of industrial buyer behavior discussed suggests the following implications for industrial marketing research. First, in order to explain and predict supplier or brand choice in industrial buyer behavior, it is necessary to conduct research on the psychology of other individuals in the organization in addition to the purchasing agents. It is, perhaps, the unique nature of organizational structure and behavior which leads to a distinct separation of the consumer, the buyer, and the procurement agent, as well as others possibly involved in the decision-making process. In 203
fact, it may not be an exaggeration to suggest that the purchasing agent is often a less critical member of the decision-making process in industrial buyer behavior.
Second, although considerable research has been done on the demographics of organizations in industrial market research—for example, on the turnover and size of the company, workflows, standard industrial classification, and profit ratios—demographic and life-style information on the individuals involved in industrial buying decisions is also needed.
Third, a systematic examination of the power positions of various individuals involved in industrial buying decisions is a necessary condition of the model. The sufficient condition is to examine trade-offs among various objectives, both explicit and implicit, in order to create a satisfied customer.
Fourth, it is essential in building any market research information system for industrial goods and services that the process of conflict resolution among the parties and its impact on supplier or brand choice behavior is carefully included.
Finally, it is important to realize that not all industrial decisions are the outcomes of a systematic decision-making process. There are some industrial buying decisions which are based strictly on a set of situational factors for which theorizing or model building will not be relevant or useful. What is needed in these cases is a checklist of empirical observations of the ad hoc events which vitiate the neat relationship between the theory or the model and a specific buying decision.
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6.2 THE INTELLIGENT INDUSTRIAL MARKETER
Ten years ago, companies were promoting their products by participating in trade shows, publishing in trade magazines, reviewing product catalogs, and sending information through the mail. Some of them are still existing today , but the overwhelming majority of them - i.e. more than 90% – are looking for products and taking the first step in the buying process online.52 They are searching for products online, reading about products online and downloading product literature containing technical illustrations. In some cases, enquiry forms are uploaded online for asking questions online – filling out forms and even chatting with customer representatives in interactive forums. Many a companies are even taking steps to design their own products in their own websites with complete drawings and specifications for giving a detail specification of their needs. Websites like www.tataref.com and www.rhiag.com are much prominent in the business of refractory products and services in Odisha51. Industrial marketing is moving online. 93.4% of industrial buyers of today are on the internet to make buying decisions. More significantly, these users expect to find out all the information they need to buy their products with technical specifications, engineering drawings, configuration information, and more. 91% of these potential buyers move on to seek out another supplier if they don’t find the information they need on a website.52
51..ThomasNet / Google Survey, 2005 52.Thomas Publishing Company, 2008
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Internet awareness is important and to have website, one may not fully appreciate, yet, the internet is indeed central to understand the marketing needs. To bridge the gap between the present website and the website of imagine would be more supportive for the company’s marketing and sales efforts. Recently, only about half of industrial marketers surveyed reported that company’s website is the powerful marketing tool in promoting their product information, which is available 24X7. 53:
Therefore, information available online today has changed the mindset of comprehending that the internet, website, designing and redesigning a website and online marketing are core to success
Does Website Support Business Plan?
The questions an industrial marketer should ask oneself about the internet and its business are : • What are company’s major business objectives, and how can online marketing support those objectives? • Whether company is planning to expand into new markets? Are the new markets in the overseas? • Whether companies are looking to up-sell or cross-sell new products or services in current markets with current customers?
53.SVM e-Business Trends in Manufacturing Report, 2007
206
Whatever the major objectives might be, the process is clear – to make one’s online marketing strategy align with these objectives. A successful online marketing strategy directly ties one’s main business objectives to one’s website – making the website the central focal point for all marketing initiatives. Refractory manufactures going online as one of the major marketing strategy to generate enquiries from the global customers. Fig 23 Industrial vendor’s website and the influencing factors in a buying decision.
(Nos)
Source:www.enquiro.com
Fig 23 indicates that the number of influencers with influencing factors that includes vendor websites, search engines and industrial information websites, as well as traditional ones such as word-of-mouth and trade publications. The prospect customers are using the internet as main source tool in searching to buy products or services. Refractory companies are engaged in the online marketing as communication tool for reaching to the prospect customers. Online has become the dominant communication channel to reach industrial buyers located anywhere around the world. 207
Fig 24 highlights the different online sourcing activities by industrial buyers and specifies that 93% of industrial buyers use the internet to have research on their buying decisions online, and 89% of them seek out to another supplier if they don’t find the information they need at a website. They simply click the back button and move on to the next website. More than 81% of buyers compare their products and go for purchasing online54. Refractory companies using online sourcing activities to reduce the communication cost with customers.
Fig 24. Online sourcing activities by industrial buyers
Source:www.enquiro.com,2005
54. www.ThomasNet.com/pressroom,2005
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Fig 25 illustrates that the internet has made buyers more independent, allowing them to gather more information for a potential purchase, to identify suppliers, even to compare and evaluate to competitors – all before they pick up a phone.
Fig 25. Traditional Decision Making Process
Negotiatio n
Source:www.enquiro.com,2005
The sourcing process has evolved from one that was largely offline and collaborative to one that is largely online and independent. Fig 26, (Vide Page ) illustrates that online search information has helped to reduce the timing of decision that used to take weeks and months to one that now can happen in days or even hours.
209
Fig 26 Online Decision Making Process
Negotiation
Source:www.enquiro.com, 2005
Building a new and useful website is not an expensive undertaking. One needs to choose a web vendor experienced in websites design and having work experience in industrial companies. Professional website like, Metaljunction helps to meet the needs of its potential customers to increase the sales.
Conclusion: Refractory manufacturers creating a website as a core part of one’s business that needs fine tuning on an ongoing basis. It plays an important role in building a long term relationship with suppliers and customers through better online interactive and user friendly information regarding product features and capabilities. It is worth to spend money on developing website for the customers.
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6.2.1 REFRACTORY INFORMATION ONLINE:
If ten years back somebody talked about selling industrial product online, it was seemed impossible. But today increasing scope, content, and use of the internet, with more, faster, and easier capabilities, such as WiFi, smart phones, texting, twitter (tweets), webcasts, global coverage, and much more, it has totally changed the mindset of the industrial marketers in selling products online eg. refractories. The Internet continues to provide increasing opportunities and benefits for all segments of the refractories world, with more to come in the future. The efficiency and productivity of management and workers are greatly enhanced, usually without having to leave their work site, and commonly with quick or immediate access to information or receipt of answers from anywhere in the world, without waiting for days/weeks. The refractory industries have changed significantly, with consolidation, imposed mandates, legal liabilities, domestic and global competition, and changing purchasing practices by customers (including demands for guarantees and reduced prices), to name but a few. The continuing “cyber revolution” is also having a major positive impact because of the many opportunities it offers for the refractory industries. It provides benefits that now affect every aspect of the business and technology on a daily basis.
This study analyzes a few of the internet sites/sources pertinent to refractory, and shows selected information there from, to indicate the current status.
REVIEW OF SEARCH ENGINES
It is interesting to see the increase in number of “hits” on www.google.com 211
between 2003 and 2009, table 25 that there has been a big increase in information/ data online, and this trend can be expected to continue.
Table 25. Hit analysis based on the word searched. No of Hits
No of Hits
source:ceramic industry, April 2000 Table 26 below shows the differences in the search results obtained from several search engines: Table 26 .Differences in the search results obtained from search engines.
source: ceramic industry, April 2000
Table 24 shown above depicts, for most cases, Google provides the significant responses. However, course that refers only to the quantity of information and not necessarily the quality of the information. In all cases, the Google responses were received in less than 1 second; e.g., the 8.29 million hits for “refractory” were received in 0.23 sec. Table 25 depicts that in the year 2009, searches for the word “refractory” on Google, Bing and Ask yielded 8,29 million hits, 1.75 million hits and 1.35 million hit, respectively, indicating a significant increase in the amount of refractory information available online. 212
Refractory Websites :
Many websites are dedicated specifically to the refractory industries. The website
of
the
Refractories
Institute,
located
at
http://www.refractoriesinstitute.org, promotes the interests of the refractories community, provides service and support to the industry, and offers the option of contacting the organization online for further information. Refractories information is also available at http://www.usa-ros.com, which offers refractory selling and purchasing options to provide a method for locating needed products and/or selling un-needed, stockpiled materials. Another site, http://www.worldrefractories.com, is an independent portal for the refractory and allied industries that is intended to facilitate the confluence of buyers and sellers worldwide. This website offers commercial information and opportunities, current technical and marketing news, a calendar of events, and the opportunity to have questions answered by refractory experts. A host of refractory-related links can also be found on the Ceramic Industry website. The sites of many of the companies listed on the Refractories Review page include product information, data sheets, company news and online ordering capabilities. SELECTED GOVERNMENT WEBSITES
There are a number of useful government websites that provide information pertinent to refractory. The website of the department of census, i.e. www.census.gov publishes an annual report of the quantity and value of the U. S. production of clay and nonclay refractories. Table 27 (Vide Page 214) illustrates the U. S. refractory production for the last five years: 213
Table 27. U. S. refractory production for the last five years
source:ceramic industry, April 2009
The U. S. Geological Survey (USGS) website, www.usgs.gov, provides annual reports about raw materials and commodities that pertain to refractory eg. bauxite, alumina, kyanite, clays, graphite, magnesite, iron & steel, iron & steel scrap, cement production, etc. The U. S. Patent office website, www.uspto.gov, offers the opportunity to find/read patents according to keywords or patent number. For example, searching the word “refractory” on Google yielded 49,911 hits in 2003, 65,853 hits in 2009. Searching for alumina yields 19,780 hits, while castable results in 5,331 hits in 2012. The above hits conclude that a significant number of online visitors are searching these words.
OTHER SOURCES OF REFRACTORY INFORMATION
Most refractory companies and their suppliers, domestic and foreign, have websites which can be found in various surface publications and online publications. The refractory company sites commonly permit direct access to current news, published articles, product data sheets and Material Safety Data Sheets (MSDS), or they provide the opportunity to request for the information. Some of these sites also permit meaningful analysis like heat flow analysis, 214
characterization/ graphing of particle size distribution etc. A useful website for making instant contacts around the world, either verbal or verbal/visual (with a webcam), is www.skype.com. The cost is minimal or free, and at various times during the day, there will be 10 to 20 million people using Skype. Another site available for conducting online discussions/ meetings is www.gotomeeting.com. And there are smart phones and other websites that offer the opportunity for making contacts anywhere in the world. And increasingly these options are being used to save time and reduce travel expenses. Another option on many websites, is the availability of photographs virtually on any subject. For example, on google.com and bing.com, a search for images of “refractory brick” instantly yielded 29,500 and 11,400 photos, respectively and a request for photos of “castable refractory” resulted in 10,100 and 3,530 items, respectively in 2009.
In addition to google.com, bing.com and other sites, a very popular source for videos on virtually any subject, A to Z, is www.youtube.com. A search for “refractories” videos immediately yielded 357 items, and there were 28 videos on “castables”. Technical associations and journals are valuable sources of refractory information; a few examples are, the journals like the American Ceramic Society publications, Refractories World Forum, Interceram (including the Refractories Manual issue) and the websites like www.ceramics.org,
www.ranews.info,www.refractories-worldforum.com,
www.interceram.info and www.tarj.org.
215
Despite ongoing changes, many of the basic principles for the industry have remained the same through the years, including the need (a) to earn a profit, (b) to improve the properties and reduce the cost of refractory formulations, (c) to optimize manufacturing and installation, (d) to develop new products, (e) to maintain good communications and (f) to maintain excellent quality control and customer service, to name a few. But certainly the options are unlimited for maintaining and growing business efficiently, whether in limited markets or globally, with the broad capabilities provided by the electronic technologies of today 55.
6.2.2 METAL JUNCTION -PROFILE:
Metaljunction, a 50:50 venture between the Steel Authority of India (SAIL) and Tata Steel . Metaljunction is now the largest e-marketplace for steel in the world, having sold over 4 million tones of steel for its clients and selling at an average rate of 150,000 tonnes per month in 2008. The buyer community of 5400 plus buyers comprising traders, fabricators, re-rollers and end-users have placed their confidence on metaljunction because of the operational efficiency, transparency and equal access that the platform provides. Metaljunction's clients have experienced significant benefits on migrating to online selling.56
55. Semler C.E(2000), “Refractories in Cyberspace”, Ceramic Industry, Gale Group, pg. 18, 2000. 56. www.metaljunction.in,2008
216
Metaljunction is also selling to service providers. It provides more than mere consultancy or a software solution. It renders services which are available to large businesses that are looking to bring about process efficiencies to their sales process and enhance domain expertise than are available in-house. It is considered as an extension of the sales arm of any business. Metaljunction deals with auction of steel, coal and refractory online. An auction event is one where the client (auction originator) wants to sell products at the best price possible. Bidders are interested buyers who are prequalified and when the auction begins, they bid what they will pay to buy a commodity. As the auction proceeds, the best price for the client is actually the highest price. At the end of the auction, the final price is the highest price at which the winning bidder will purchase the material from the seller provided that the highest price meets the seller's reserve price.
Innovation Rewarded At metaljunction, innovation is a way of life and over the years, company has come up with ground-breaking innovations in every function, be it operations, customer care, technology or administration. Besides improving the processes, reducing the cost and increasing the profitability, with continual innovations metaljunction has succeeded in adding value to its customers as well as establishing a positive impact on the socio-economic progress of the nation as a whole.
6.3 Marketing Mix practices in B2B marketing (refractory) Marketing involves a number of activities. To begin with, an organisation selects its target group of customers to be served. Once the target group is selected, right products are placed in the market with appropriate product, price, distribution and promotional efforts. These are to be combined or 217
mixed with an appropriate proportion to achieve the required goal. Such mix of product, price, distribution and promotional efforts is known as ‘Marketing Mix’. According to Philip Kotler “Marketing Mix is the set of controllable variables that the firm can use to influence the buyer’s response”. Figure 27 shows the controllable variables, in this context refer to the 4 ‘P’s [product, price, place (distribution) and promotion]. Each firm strives to build up such a composition of 4‘P’s, which can create highest level of consumer satisfaction and at the same time meet its organisational objectives. Thus, this mix is assembled keeping in mind the needs of target customers, and it varies from one organisation to another depending upon its available resources and marketing objectives. Fig 27: Four P components of the marketing mix
Source: http://business-fundas.com/2011 Marketing in the refractory sector takes place with the well-known "4P's": product, price, promotion, and place (distribution). Both presale and post sale promotion activities are undertaken to forge strong bonds between a seller and a buyer. Person-to-person as well as online links are established with proposals, design sketches, price offers, and legal contracts being shuffled 218
quickly back and forth between the parties. Building loyalty occurs in a collaborative fashion, starting with an involvement of clients in product design and installation procedures. Sellers need a sales force with technical skills. Dealers are located near major industrial centers. Independent engineering contractors appointed to assist in installing new or replacing old refractory products in clients' facilities. One current concern is the growing shortage of large ships capable of transporting refractory materials.
Pricing strategy has evolved in this as in other sectors. Initial purchase price is still used in some cases, but more emphasis is now given to life-time costing that considers installation, maintenance, and repair charges for the refractory materials over the life of the furnace or kiln using them. For example, refractory suppliers are increasingly quoting steel manufacturers a total system price per tone of steel produced. Refractory makers have their own websites and also work with online directories, institutes, or associations. Among the better known sites are: www.refractoriesinstitute.org and www.worldrefractories.com. Let’s have a brief idea about the four components of marketing mix practices in refractory marketing. Product (Customer Value)
• Then: “Product” used to be a physical product or a service and by definition is any commodity that customers are willing to pay for. • Now: The definition of “Product” has grown from products and services to include experiences, add-ons, privileges, information, partnerships and more. The basic definition is still the same that “Product” encompasses value customers will pay for e.g. refractory makers try to satisfy the needs of the customers based on the performance of the refractory applications in the user industries. 219
Tata Krosaki Refractories Ltd (TRL): TRL produces high alumina, basic, dolomite, silica and monolithic refractories and offers design, procurement and re-lining applications services. It is one of the few companies worldwide to produce silica refractories for coke ovens and the glass industry. The company has a basic bricks manufacturing unit in China.
IFGL Refractories Ltd (IRL): IRL has diversified its product mix e.g. refractories and ceramics with the changing steel making technologies. It manufactures all types of refractories serving to ladle, tundish and furnace with state of the art technologies with innovative packaging, e.g. tamper proof packaging for bio-ceramic products offered to customers.
OCL India Ltd : OCL holds 92 patents in India and abroad for refractory products and processes. Products developed through OCL's own R&D efforts are noted for their excellent quality and performance.
Sarvesh Refractories Ltd: Sarvesh refractories operate in only one business segment and one product viz., refractories.
Manishri Ceramics and Refractory Pvt Ltd: Manishri manufacturers range of highly sophisticated world class refractories-fireclay, high alumina, basic, precast & prefired shapes out of low cement castable, low cement & low moisture castable and ramming mass.
Price (Cost) • Then: Monetary price used to be a critical factor in what was produced and how much of it customers would buy. Determining optimum price varies for 220
different products and is generally a factor of cost and profit or a number determined by the market. • Now: The definition of “price” should now accommodates value, add-ons, partnerships and other factors in weighing how to satisfy the needs of the customers
against finite resources. For example, refractory suppliers are
increasingly quoting steel makers a total system price per ton of steel produced through total refractory management (TRM) system. Other variables include ISO certification, product warranties, meeting deadlines, and service contacts on a 24/7/365 basis.
Tata Krosaki Refractories Ltd (TRL): TRL’s pricing strategy is based on the customer’s requirements considering cost of the raw material , standard variable cost and other cost (overhead). More emphasis is given to life-time costing that considers installation, maintenance, and repair charges for the refractory materials over the life of the furnace or kiln usability.
IFGL Refractories Ltd (IRL): IRL’s pricing strategy based on the price administration based on geographic location, application of products performed by customers, position of distribution channel members. The products have low realizations compared to other refractory industries in Orissa because raw material cost around 45% of net sales .IRL’s entire raw material requirement from either globally or domestic purchased on spot basis*. *Spot basis meaning both price and delivery of the material are settled at the same moment in time.
221
OCL India Ltd : OCL’s refractory products enjoy high realizations compared to the other refractory industries in Orissa. This is primarily because of OCL’s presence in high-margin products like silica bricks and concast. Also, product innovation through continuous R&D helps OCL command better pricing for its products57.
Sarvesh Refractories Ltd: Sarvesh scores high on cost competency through backward integration by processing raw material in various rotary kilns.
Manishri Refractory and Ceramics Pvt Ltd: Manishri’s pricing strategy is based on the differences in price for similar products of differing grades and qualities.
Place (Convenience) • Then: After answering what and how much, the traditional mix looks at the question of where and how customers would purchase their products. • Now: In doing business today, one must be cognizant at least of the fact that “Place” encompasses a lot more than just physical. Purchasing online, delivery and manufacture-on-demand are just some of the ways that “Place” has changed in recent decades, e.g. refractory makers are now a days going for the online biddings through Metaljunction.
Tata Krosaki Refractories Ltd (TRL): TRL’s sales and marketing group focuses on managing specific product lines across distribution channels, involving screening sales leads, preparing bid documents(in response to the customer request for a proposal), making competitive bidding and negotiating and executing the sales agreements. 57. Company, Credit Rating and Information Services of India Ltd. (CRISIL) Equities
222
IFGL Refractories Ltd (IRL): IRL participates in a variety of cooperative ventures that range from licensing to joint ventures, from partnerships to strategic alliances. Such arrangements are done to gain access to new technology, expand geographic reach, recruit customers, and achieve greater market influence.
OCL India Ltd : Integrating its operations with the global market, OCL has continued its involvement with the world leaders of refractory technology through collaboration.
Sarvesh Refractories Ltd: Sarvesh refractories have advantage of location of plants to the close proximity of the ports in India for the purpose of import of raw materials and export of refractory products to the overseas market.
Manishri Refractory and Ceramics Pvt Ltd: It has expanded its domestic presence through marketing offices and overseas market with agents located in different countries.
Promotion (Communication) • Then: The last “P” has come to symbolize what marketing is all about and has traditionally encapsulated advertising, direct marketing, personal selling and other elements of the marketing communication mix. Promotion is how one creates customers for the value one delivers. • Now: Nowadays, it is important to nurture relationships with customers through interactive marketing communication. It is not enough to manufacture a “good product” and hope it sells, e.g. refractory makers by establishing long term relationship provide total refractory management solution to the user industries like steel. 223
Tata Krosaki Refractories Ltd (TRL): TRL is the only refractory industry in Orissa to implement enterprise resource planning (ERP) system. TRL’s change from a supplier of refractory products to a complete service provider is successfully mapped and delivered through the Baan ERP system. Major advantage of implementation reduces the communication cost by 20 lakhs per annum58.
IFGL Refractories Ltd (IRL): IRL has a strong marketing network with export agents spread across India and World. OCL India Ltd: OCL has been actively participating by installing business stalls at International Trade Fairs .
Sarvesh Refractories Ltd: It has an excellent network spread all over India that can channel its knowledge straight to customers. Special trained engineers with years of experience are always at hand to give suggestions, recommendations to our clients providing various Value Added Services. Manishri Refractory and Ceramics pvt Ltd: Manishri’s efficient refractory consultants from different countries help the company to reduce the communication gap between the company and the customers.
58.http://www.expresscomputeronline.com/20040517/ebusiness01.shtml
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CHAPTER 7 7. RESEARCH METHODOLOGY 7.1 INTRODUCTION: The present chapter describes the research methodology applied for the study of this research work. The most important aspects of the research methodology are design of the research, data collection and data analysis. Research methodology is a way to solve the research problems systematically. It is understood as a science of studying research scientifically. The study includes the steps adopted in studying the research problem with logic. It is necessary to know the research methods or techniques and the methodology. The study carried out for this research work is both qualitative and quantitative in its support. The qualitative approach applies to both, descriptive and inductive forms of research. While as in quantitative approach, an extensive use has been made of the literature available on the history of the refractory industries and the nature of the problems. TRL , IRL, OCL, Sarvesh and Manishri located in Orissa have been chosen as the target companies in particular.
7.2 RESEARCH DESIGN Descriptive research design is used to obtain information concerning the current status of the phenomena to describe “what exists” with respect to variables or conditions in a situation. The standardisation of marketing variables as strategy in global marketing is an accepted practices. Very often, multinationals use standardization to gain competitive advantage and improve their performance. The question is, whether the strategy of standardisation generates profit for the marketers or affects organisation’s performance. This study investigates this question and provides insightful information in marketing strategy and planning. It investigates the relationship between the 225
elements of standardisation and performance of firms with the help of a survey i.e. a structured questionnaire followed by a personal interview of the senior executives of the companies. 7.3 DATA SOURCES Combinations of both primary and secondary resources have been used to achieve the objectives of this study. 7.3.1 Primary Data A structured questionnaire is used to study the internal functioning of the organization. The questionnaire is addressed to general managers or executives, raw material suppliers and customers of refractory industries to analyze the strategies adopted by the companies to sustain its competitive advantage. Questionnaires are sent out through two basic ways, first, the questionnaires are sent through electronic mail and second the questionnaires were sent out through the traditional mailing method i.e. by post. A draft questionnaire is appended at the end for the purpose. Personal interviews carried out with the officials of the company from different managerial cadre like, general manager, chief manager, and operational managers are to determine the marketing aspects of the organization and the industries. This aims to find out the reasons for the attainment of competitive advantage through effective marketing strategies adopted by the companies. The data collected are analyzed to determine the positive as well as the negative aspects of the organization in relation to the industry, to understand the factors contribute to its competitive advantage and to mark the factors which hinder firms growth and may affect the sustainability of the competitive advantage in future.
226
7.3.2 Secondary Data The secondary sources of data consist of books for an academic perspective, industry journals, magazines for competitive strategy, annual reports, government publications and views of other authors. 7.4 SAMPLING METHODS The sample is drawn from the top refractory industries in Orissa according to the sales volume using non probability method. This sampling technique is useful in documenting that a particular quality of a substance or phenomenon occurs within a given sample. Such study is very useful for detecting relationships among different phenomena. Since the primary purpose is to test marketing orientation and activities within a firm, various positions with commercial or marketing functions are selected. These marketing positions include vice presidents, general managers, chief managers, operational managers in different refractory industries of Orissa, since they have a strong influence on commercial and marketing decisions. And from various raw material suppliers and customers of refractory industries located in Orissa and around the world i.e. China , US and Russia. The sample size is set according to two main considerations. First, the most important issue that influenced the sample size was the resources available for this research. Second, the standard error (5%) with a confidence range for variability of +1-2% was achieved in a sample size of 64.
Instruments and Method: Pre tested questionnaire are mailed to the chief executives of the companies or senior executives responsible for international marketing of the companies. Specially, the respondents are asked to rate a specific product or product category standardised by the companies in a specific international market. Respondents are asked to rate the degree of 227
standardisation on a five point scale (5=standardised and 1= not standardised) for each of the eleven elements of standardisation.
7.5 METHOD OF ANALYSIS Using SPSS version 15, a factor analysis determines that the three underlying dimensions/factors of standardisation are promotion standardisation, product standardisation and distribution standardisation. These three factors, along with five other marketing variables (region, stage of product life cycle, market share/leadership position of the product and type of products are regressed with two performance indicators (return on sales and sales growth). The relationship between the extent of standardization and performance also is high-lighted, and this study examines the same group of firms whose products are marketed.
CHAPTER 8 8. EMPIRICAL FINDINGS 8.1 INTRODUCTION Data, after collection, are processed and analyzed in accordance with the outline laid down at the time of framing research objectives. It is essential for a scientific study to ensure that all relevant data are used for making contemplated comparisons and analysis. Technically speaking, processing implies editing, coding, classification and tabulation of collected data so that they are amenable to analysis. The term analysis refers to the computation of certain measures along with searching for patterns of relationship that exist among data groups. Thus “in the process of analysis, relationships or differences supporting or conflicting with originals or new hypothesis should be subjected to statistical tests of significance to determine with what validity data can be said to indicate any conclusion.” But there are persons (Kothari, 228
2007) who do not like to make difference between processing and analysis. (Kothari, 2007)
8.2 PLAN FOR DATA ANALYSIS This section provides a discussion on the analysis of primary data and findings of the study. Firstly, the characteristics of the sample are being described. It is followed by a reliability test. Then the underlying dimensions of standardization and its prevalence is discussed. The relationship between standardization and firm performance is elaborated at the end. Sample Characteristics: A total of 64 respondents constitute the sample of the study. The respondents are mostly top executives of the refractory industries. About two-fifths of the sample holds a vice president or above rank in the organization and one-third holds a Director or similar position in the organization. A majority of the refractory industries (53%) are involved in marketing of refractory products. Companies selling raw materials and services to refractory industries are 25% and 22% of the sample respectively. Only 28% of the companies had international sales accounting for 50% or above of the total sales. About 72% of the companies marketed in the developed region (mostly Europe). About 80% of the products/services were at the introduction-growth stage and nearly 77% of them are either market leaders or held above average market share depend on the product mix*.(Table 28.) Table 28.Respondent and product characteristics. Description
Frequency
Percentage
Position of the Respondent
39
60.9
Vice President and
21
32.8
4
6.3
above Manager or similar
229
level Regional Difference(Region) Developed
46
71.9
Developing
18
28.1
Introduction-Growth
51
79.9
Maturity-Decline
13
28.1
Leader and above average
49
76.6
About or below average
15
23.4
More than 50%
18
28.1
Less than 50%
46
71.9
Industrial
34
53.1
Raw material supplier
16
25.0
Service (installation)
14
21.9
Product life Cycle(PLC)
Market Share/Leadership(MKTSHR)
International Sales(INTSALES)
Product category(PRODUCT)
*Product mix for example may consist of size and weight of the product, volume of output, product quality, product design, product range, brand name, package, product testing, warranties and after sales services and the like.
Reliability: In order to determine response-bias, a split half t-test is conducted. The sample is divided into two equal groups of 32. Table 29 (Vide Page 231) illustrates reliability scores based on the split half t-test conducted on eleven standardisation variables and two performance variables. None of the 13 variables were significant indicates that there is no bias in item responses.
230
Table 29. Reliability scores: split half T –test results
Description
t-score
Probability of t
Brand name
-0.66
0.51
Product Characteristics
-0.01
0.99
Packaging and design
0.24
0.81
Product positioning
-0.29
0.85
pricing
-0.29
0.77
Advertising theme
0.73
0.47
and 0.76
0.45
Media allocation
0.80
0.43
Sales promotion
-0.17
0.87
Distribution
-0.11
0.91
Public relations
0.06
0.95
Return on sales
0.07
0.95
Sales growth
-0.83
0.41
Elements
of
standardisation
Advertising
copy
layout
Performance Criteria
Note: t-scores are based on the equal variance assumption.
Underlying Dimensions:
As mentioned, there are eleven elements of standardization that are used by respondents as part of their marketing strategy. A factor analysis is studied with the help of SPSS to determine if there are any underlying factor or 231
dimension of standardization. The factors so obtained are useful in understanding the relationship between marketing and performance variables. Using eigenvalue greater than one criterion, three factors are retained. These three factors accounted for 70% of the variability. The factor pattern and loadings ( table 30) show that the promotion related variables are mostly loaded heavily on Factor 1. The variables that loaded heavily on Factor 1 are advertising theme, advertising copy and layout, media allocation, sales promotion and public relations. Product packaging and design also have a heavier weight on this factor, reflecting the influence of packaging in promotion. Thus Factor 1 can be named as Promotion Dimension of standardization. This factor accounted for 37% of the variance. In Factor 2, the variables/elements that have heavier loadings are brand name, product characteristics and product positioning. Since all these are product related variables, those can be named as Product Dimension of standardization. Product dimension explains 19% of the variance. In Factor 3 , distribution is the lone variable that has heavy loading and it is named as Distribution Dimension of standardization. Distribution dimension explains 12% of the variance. Interestingly, factor analysis points out the conceptual elaboration (almost paradigmatic) of the 4P’s in marketing. Pricing, though another “P” of marketing, does not show any significant correlation with the factors. Table 30. Factor pattern and loadings Elements
of Factor 1-PromotionFactor 2- Product Factor
standardization
3
–
Distribution
Brand name
0.25904
0.66012
-0.17037
Product
0.46196
0.67314
0.21259
and 0.86014
0.13818
0.07160
Characteristics Packaging Design 232
Product positioning 0.25945
0.72456
0.15697
Pricing
0.58121
0.27140
-0.21607
Advertising theme 0.83288
0.07713
-0.30196
Advertising
-0.27038
0.01186
copy 0.86570
and layout Media allocation
0.77457
-0.53412
0.16609
Sales promotion
0.66342
-0.01653
0.33595
Distribution
-0.12808
0.00564
0.89806
Public relations
0.67555
-0.52002
-0.03859
Eigen value
4.3814
2.1417
1.1905
Variance
39.83
19.47
10.82
explained(%)
8.3 RESULT OF THE STUDY Prevalence and Relationship The degree and prevalence of standardization vary across different elements. The means and standard deviations show that (table 31) refractory manufacturers tend to opt more for product standardization. Brand name, product characteristics and product positioning are rated very high on prevalence. The next high ratings are received by the elements that represent distribution and pricing. Relatively speaking, promotion related elements are receiving low mean scores in terms of standardization. The next high ratings have been received by the elements that represent distribution and pricing. The high mean scores of product standardization and moderate mean score of distribution have a bearing on the factor loadings and the relationship of the factors with marketing and performance variables. Therefore, it can be well
233
said that the refractory companies rely more on product standardization than promotion. Table 31. Elements of standardisation and marketing variables: prevalence and relationship
F-ratio of Predictors variables Mean Std.
Criterion Variable
Model F- R-
Dev
ratio
square
0.12
Region
PLC
MKTSHAR INTSALE Product E
0.50
6.27 ** 0.02
S
Type
1.97
0.70
Factors
-
-
1.31
Factor
-
-
4.50** 0.32
8.56** 0.18
-
-
6.35** 0.40
5.58** 8.87** 5.71** 22.76** 10.85*
0.01
5.93** 3.31**
1(promotion) Factor 2(Product)
*
Factor
-
-
6.35** 0.40
5.58** 8.87** 5.71** 22.76** 10.85*
3(Distribution) Element
*
of
standardization Brand name
4.36 1.03 5.24** 0.36
10.05* 19.60* 0.02
0.03
0.33
*
*
2.43
5.33** 0.84
12.28** 4.00**
1.15 2.59** 0.21
0.72
6.72** 1.75
8.47** 1.41
4.13 0.85 4.33** 0.31
1.99
0.07
1.72
3.67*
3.42**
Pricing
3.34 1.10 0.93
3.30* 0.01
0.29
0.00
1.02
Advertising
3.22 1.08 2.19* 0.19
1.08
0.96
4.61** 0.08
1.07
3.16 1.25 1.48
1.07
4.13** 0.91
Product
4.30 0.86 4.29** 0.31
characteristics Packaging and 3.92 design Product positioning
0.09
theme Advertising copy
0.14
0.98
0.28
and
layout
234
Media
2.69 1.08 1.63
0.15
1.01
7.51** 1.83
1.52
0.38
3.06 1.02 3.24** 0.25
2.03
1.19
3.69*
8.94**
3.39 1.22 4.26** 0.31
5.41** 3.15* 2.25
15.88** 5.95**
1.62
0.01
allocation Sales
0.94
promotion Distribution
Public relations 2.66
1.24 1.27
0.12
0.82
1.51
2.38*
Note:**=significant at p=0.05 level, *=significant at p=0.10 level
The relationship between the elements of standardization and the marketing variables reveal an interesting pattern. General linear models have been used in SAS with both the factors and the elements of standardization. At the dimension /factor level, of the three factors, the promotion, the product and the distribution models are valid at the global level (i.e., their F-Factors are significant). The R-squares show that the predictor variables explain 32% of variance in product model and 40% of variance in distribution model. No significant relationship between promotion and other marketing variables have been observed. Among the predictor variables, regions, market share and type of product are significant in both product and distribution (two valid ones) factors. The model between each element of standardization and the marketing variables is given in Table 31(Vide Page 234 ), basically confirms the findings of the dimension/factor of standardization. The regression models with the product related elements of standardization (i.e., brand name, product characteristics, product positioning) offer valid relationship (vide the F-ratios). Among the elements of promotion, advertising theme and sales promotion model are significant. The model relationship between distribution and elements of marketing variables is also significant. Relatively speaking, the R-squares of all the models are low, indicating that marketing variables explain only a small portion of the variance in standardization. 235
Relationship with Performance: In order to determine the effort of standardization on performance, the dimensions or factors derived previously are regressed with two measures of performance – after tax return on sales and sales growth. The five marketing variables are also used as predictors along with the factors (or dimensions) of standardization. The results of the generalized linear model (GLM) regression are given in Table 32 below ,both performance models are found to be valid (vide the F-ratios). In the return on sales model, the predictors explain 53% of the variance. Standardization of product, distribution and region are found to be significant in explaining the sales growth of the companies. Evidently, both GLM regressions lead us to believe that, by and large , standardization positively contribute to firm performance. Firms thus can take advantage of standardization for competitive gains in international markets. Table 32. Regression results: standardisation and performance
Return on sales
Sales growth
Model F-ratio
6.72**
7.29**
R-square
0.53
0.55
Factor 1(Promotion)
1.81
7.36**
Factor 2(Product)
7.07**
7.32**
Factor 3(Distribution)
8.35**
1.16
Regional
10.18**
12.47**
Predictor Variables
Difference(Region) Product life cycle(PLC) 0.37 Market
0.09
2.42 6.16** 236
share/leadership(MKTS HR) Internationalization(INT 0.37
0.07
SALES) Product Category
1.79
2.59*
Note:** Significant at p=0.05 level . *=significant at p=0.10 level
The study investigates the relationship between standardization and firm performance. Eight predictor variables (three dimensions or factors of standardization and five marketing variables) are regressed with two performance criteria (return on sales and sales growth). The findings of the study are summarized as follows: Overall, standardization positively contributes to firm performance both in terms of return on sales and sales growth. In the return on sales, product standardization, distribution standardization and regional differences are significant. In the sales growth, promotion standardization, product standardization, regional difference , market share/leadership and type of product are significant. Regional differences seem to play an important role in standardization. Standardization is more observed in developed countries than developing countries. International marketers should also recognize the influence of market share/leadership of the product/brand and type of product in deciding about standardization. Research may be conducted further to investigate the relationship established in this study regarding performance and standardization process.
237
CHAPTER 9
9.1 SUMMARY
The research work entitled “Marketing of refractory products- A study of refractory industries in Orissa” was carried out to study the competitive advantages of the refractory industries located in Orissa, India. TRL, IRL, OCL, SARVESH and MANISHRI are the target organizations for the above research study. Analysis of the study has led to the following conclusion:The strategic outlook has used SWOT analysis to point to possible strategic responses for the refractory industries in Odisha. The SWOT analysis illustrates that the refractory industries is facing a large number of challenges over the coming years and many of the challenges are rooted in increased globalisation and the challenge of climate change. In the face of the challenges from globalisation the refractory industries in Odisha is well-positioned with new technologies, high quality brands, a tradition for innovation and knowledge intensive enterprises which must be exploited in the future. The refractory industries have to give high priority in new technologies, strengthening brands and developing services to maintain the competitive advantages. Constant improvement in technologies to increase flexibility and efficiency must be encouraged. IT technology and the internet give access to markets and customers in new ways and this leads to new business opportunities for refractory manufacturers. It’s high time for refractory industries to recognize that customer satisfaction is essential for survival in competitive environment. Customer's satisfaction like quality is a journey and not a destination. TRL require to become a leading refractory solution provider to improve the customer satisfaction level
238
to ensure profit and growth of the company. Standardization of the product can have greater impact on the performance of the industries in the long run. IRL believes that customer's satisfaction is possible if the following dimensions are fulfilled: 1. Delivery in time. 2. Product mix according to customer requirement 3. Flexible pricing policies 4. Complaint settlement 5. Culture of customer service. OCL require to become an independent refractory solution provider in due course of time to remove more dependency on the foreign collaborator for technology and know how. The long-term survival of the small players like, Sarvesh and Manishri require to upgrade their operations with global technologies. The following problems have been observed during the study on the refractory industries in Orissa:
1. Risk in relation to refractory industries. 2. Dependencies of refractory industries on labour. 3. Increase in taxes and other levies imposed by the central or state governments. 4. A slowdown in economic growth in India causing business to suffer. 5. Any unfavorable government policy in relation to refractory industries has adverse impact on the company.
6. Environmental regulation imposes additional costs that affect the result of operations. 7. Lack of basic infrastructure affects the operations. 239
8. Exposure of refractory industries to natural calamities at or in the vicinity of its manufacturing units. 9. Dependency more on the foreign collaborators for technology and know how. 10.Tapping the unexplored export market. 11.Threat of cheap import of refractory products from China. 12.Facilitating refractory industries, small and medium enterprises (SMEs) access to international markets.
9.2 SUGGESTIONS AND CONCLUSION.
Refractory industries in Orissa need to take the following precautionary measures to overcome the problems: 1. Risk in relation to refractory industries. The refractory industries are to some extent a cyclical industry. The performance of the industries depend on a number of variables such as international prices of raw material, fluctuation in rupee value, import tariff, domestic duties and taxes, changes in relationship between revenue and cost, consolidation in the refractory industries, availability of raw material etc. At any point of time, the company’s operating results may vary from the expectations of shareholders, market analyst and public on account of any or all the above variables. Suggestion: Refractory industries should provide complete refractory solutions in the form of total refractory management. It has great advantages as it gives dedicated business and ensures cost effectiveness.
240
2. Refractory industries are labour intensive. Being a labour intensive industry, the refractory makers may possibly face labour strikes, lockouts etc which may adversely impact production, and profitability. Suggestion: Refractory industries should outsource manpower from the third party on contract for hiring blue collar employees imparting in house training scope for the skilled job on multiple machines. 3. Increase in taxes and other levies imposed by the central or state governments on the acquisition of capital goods/components, purchase of raw materials or finished goods may have an adverse effect on the profitability of the company. Increase in the custom duty on raw material, consumables and machinery along with excise duty on finished goods with central sales tax, value added tax(VAT ), state entry tax and other levies affect the refractory manufacturers. The taxes and levies affect the cost of production and the sale price of its products and hence affects the demand for its products. Any increase in any of these taxes or levies or the imposition of new taxes or levies in the future may have an adverse impact on the company’s business and financial condition. Suggestion: Refractory industries can set up plants in the SEZs in India. 4. A slowdown in economic growth in India causes business to suffer. Any slowdown in the Indian economy and the consequent impact on cement and steel industry adversely affects the demand for the refractory products and consequently affects the results of operations. Suggestion: Refractory industries can tap the market with growing demand from other sectors like sponge iron and glass.
241
5. Any unfavorable Government policies in relation to refractory industries have adverse impact on the company. Refractory industries healthy growth depends on the policies of the Government. As the refractory industries are heavily dependant on the raw materials which are mined, any change in the policy with regard to mining activities affects the industries existence and growth. Suggestion: Refractory industries with M & A with global players can have better access to raw materials and markets. 6. Refractory industries are subject to numerous regulations. The company is subject to numerous laws and regulations in the jurisdiction in which it operates, including those relating to the mining, environmental clearances, health and safety laws. The success of the company’s strategy is contingent upon, among other things, receipt of all required licenses, permits and authorizations, including mining permits, environmental, health and safety permits, etc. Failure to obtain the licenses or permissions leads to increased costs and delay in the smooth operation of the company. Suggestion: Refractory industries should focus on the recycling of the products to have better impact on the environment. 7. Disruptions or lack of basic infrastructure affect the operations. Refractory being a manufacturing industry, the operations require continuous supply of power and any disruption in the supply of the same may affect the operations of the company and hence may have an adverse effect on the business, results of operations and financial condition of the company. Suggestion: Refractory industries can go for Green refractories that consume less energy, fewer raw materials and emit less carbon.
242
8. Company’s operations are affected by natural calamities at or in the vicinity of its manufacturing units. The operations of the company are dependent on the ability to protect its manufacturing units from any natural calamity such as fire, earthquakes, floods, natural and similar events. The occurrence of a natural disaster or other unanticipated problems at its manufacturing units can cause interruptions in its operations. Any damage or failure that causes interruptions in its operations has a negative impact on its profitability and financial condition. Suggestion: Refractory industries should set up manufacturing units in risk free zones in India like, Gujarat and Orissa. 9. Dependency on the foreign collaborator for technology and know how. Refractory industries in Orissa are more depended on the foreign players for technology and know how. Suggestion: Refractory industries with in-house R & D facilities can help in developing new products for user industries. 10. Indian refractory export opportunities: The industry maintained an annual turnover of Rs 3,000 crore in 2008-09 almost similar to the last year, and a sparkling growth from Rs 2,370 crore during 2006-07. Due to recession production slipped to 1 million tons(MT.) in 2008-09 from 1.3 million tons (mt) in 2007-08 and 1.08 mt in 2006-07. Growth in sales was driven by growing demand from sectors like steel, cement, aluminium, sponge iron and others. Exports during 2006-07 was Rs.314 crore and increased to Rs.452 crore in 2007-08 and subsequently decreased to Rs.400 crore in 2008-09. Suggestion: Refractory industries can go for backward integration of synthetic raw materials sources which can reduce the tension of soaring cost of raw material i.e. alumino silicate fiber, mullite, zirconia.
243
11. Future prospects of Indian refractory makers: In future, the biggest threat of competition for the Indian refractory makers will be from Chinese refractory makers. Indian refractories are thus becoming more and more competitive. It is worth mentioning, that these markets are very particular about the consistency of the quality and customer retention is the signal that assures the quality of Indian products. So, with superior engineering skill, India is importing high quality technology and equipment from Germany and Italy, to have superior quality refractory. However, overseas producers of high quality steel are slow in accepting Indian refractory. Otherwise, acceptance of Indian products is high. So the growth of the Indian steel sector is extremely crucial to analyze the future status of Indian refractory makers. Therefore, the refractory makers are trying hard to make the best prediction regarding the realization of the plans. Suggestions: 1. Refractory industries can set up new plants in different countries with rich availability of raw materials i.e, China and Russia. 2. Growth prospects are high for monolithic castables which feature high performance and flexibility in application. 3. Significant growth potential can be witnessed in Zirconia, silicon carbide extra-high alumina offering strong performance in special applications. 12. Facilitating refractory industries, small and medium enterprises (SMEs) access to international markets: Though there are large companies in the Indian refractory industries, the SME sector is a major player accounting for more than 50% of the market share. In 2010, the industry comprises over 100 established units, with 11 large plants, 24 medium-scale units and remaining 65 in the small-scale units. Majority of refractory industries are small scale industries facing stiff competition from international 244
markets on quality and price. During the past decade there have been steady technological and structural changes which have made it easier for SMEs to participate in the international economy. Advances in information and communication technologies (ICTs), and in particular, the internet, have been a major factor in facilitating information flows and expanding the market potential of smaller firms. Governments have been making efforts to reduce barriers to international business activity, at the global and especially at the regional level. A major policy challenge is to reap the potential benefits of the global economy for all businesses, including the SME sector. However, SMEs are still relatively under represented in the global economy. SMEs only contribute between one quarter and one third of manufactured exports and account for a very small share, usually less than 10%, of foreign direct investment (FDI) (Schreyer (1996), Hall (2002), Sakai (2002)). In most national economies SMEs make up more than 95% of market participants, and contribute around 50% of direct value added or production. Why do SMEs make, proportionately, a much smaller contribution to value added in global markets and why are fewer SMEs active on global markets? The reasons for this are manifold. International activities expose SMEs to a more complex and risky business environment, compared to larger firms. SMEs are relatively unprepared and less well-resourced. Some of these risks and complexities can be addressed by governments as they relate to the differing regulatory, administrative and policy environments that governments create. There are significant potential benefits which might accrue from the creation of a more business friendly, more integrated economy at international levels. It’s high time that SMEs need to increase their contribution to the international economy to give economic boost not only in the state but also in the national level.
245
SMEs use a variety of means, to pursue international strategies (such as direct and indirect exports, alliances, networks, FDI-Foreign direct investment, etc.). SMEs still remain underrepresented in the international economy. How to better capture the international potential of SMEs and entrepreneurs is an important policy issue. For many refractory industries gaining access to international markets and internationalisation is a strategic instrument for their competitiveness and their further development. With easy access to global markets will help to realise the potential for prospective high-growth companies. Such firms have high fixed and sunk costs which need to be recouped from as large a market as possible, as quickly as possible. Access to global markets can also offer a host of business opportunities, such as new niche markets; possibilities to exploit economies of scale, scope, volume and technological advantages; the upgrading of technological capability; ways of spreading risks; lowering and sharing costs, including R&D costs; and in many cases, affording improved access to finance. Firms with highest growth and exports, have realized that export is not the end of a strong growth process but rather appears instead to be its starting point and serves to accompany the growth process (OECD, 2002a). In addition to opportunities, globalisation can also pose challenges and threats for SMEs by exposing them to heightened international competition from foreign firms and the associated adjustment and exit costs incurred; the issues of standards and international compatibility; intellectual property concerns; political risks, corruption and rule of law concerns. Globalisation can have important implications for business and organisation models, managerial and technological capability; and innovative capacity. SMEs from a resource viewpoint are less well-equipped/prepared than larger firms to face these globalisation challenges or to exploit the opportunities presented. 246
Suggestions: 1. SMEs’ access to global markets: opportunities and challenges
The recent trend includes globalisation of business through global industrial restructuring, by creating value chain like, technological tie ups (OECD, 1997, and in Sakai, 2002). There is evidence that a group of SMEs with highgrowth potential require early access to international markets to ensure their development and growth (OECD, 2002a). The globalisation process for SMEs can be realised through any of a range of cross border activities, including trade, international investment, and participation in strategic alliances, partnerships and networking arrangements, affecting a variety of business functions ranging from research and product development to distribution. 2. Evidence on SME participation in international markets Data are scarce and do not provide, except for a few countries, comprehensive and detailed information on the extent of the SME role in international markets and the pattern of its development. However, it is possible to sketch a broad picture for many Organisation for Economic Co-operation and Development (OECD) and some non-member economies, of SME globalisation which shows the disproportionately low level of activity by SMEs in international markets, when compared to that of larger firms. 3. SME exports and imports The incidence and level of exporting activity are related to firm size, and as mentioned earlier, SMEs are in general, under-represented in world trade, although there is increasing evidence of SME globalisation for OECD and non-OECD economies. While they can comprise up to 99% of a country’s enterprises, only about one-fifth of manufacturing SMEs in OECD countries draw between 10% and 40% of their turnover from cross-border activities. 247
Overall, SMEs are estimated to contribute between 25% and 35% of world manufactured exports, although significant variations can exist across economies and by sector (Schreyer, 1996, Sakai, 2002). 4. SME participation in international alliances and networks The recent and ongoing wave of global industrial restructuring, combined with technological advances (especially in ICTs) have been the major driving force for the rapid development of cross-border strategic alliances, mergers and acquisitions and inter-firm networking. Opportunities have emerged for SMEs to become: i) partners in international strategic alliances; ii) participants or targets in cross-border mergers and acquisitions; iii) specialised suppliers to multinational enterprises; iv) members of globalised informal networks; and/or v) participants in electronic networks (Sakai, 2002). For SMEs such arrangements can confer any of a variety of benefits including access to financial resources, pooled research efforts, product development, wider distribution channels, etc. Large firms are motivated to form alliances with SMEs, as when faced with rapid changes in technologies and customer preferences, and shorter product life cycles, such alliances can help to fulfill specific needs. 5. SMEs and Foreign Direct Investment (FDI) Foreign direct investment (FDI) can be another important vehicle for SME globalization. SMEs can gradually start creating market through export and perhaps by alliances, but to establish themselves they need to go for FDI.
248
CONCLUSION: Refractory industries in comparison to other industries are small but their contributions to the Indian economy cannot be ignored. The study truly points out that the major refractory industries located in Orissa have set a benchmark in the world refractory market through their products and performance. Major refractory industries in Orissa like TRL, IRL and OCL have adopted different marketing mix strategies to sustain their market share domestically and globally. Individual companies cannot change the framework conditions, but introducing cleaner technologies, energy management, and branding environmentally sound practices will create not only a sounder environment but also better business opportunities. It will be important to engage not only with ceramics technology experts but also to engage actively in for example collaborative research with end-user companies or partners in other sectors to discover new applications for ceramics technology. Collaborative research and a user-oriented focus on solutions can lead to strong competitive advantages with products deeply integrated into the value chain and consequently production processes can be customised even more precisely and individually. The small refractory players like Sarvesh refractories and Manishri refractories could be integrated even more into global structures tomorrow without losing the agility of a SME. A highly-skilled workforce will be in demand in production and refractory industries must have the tools and skills needed to operate the technologies and to collaborate across different departments regardless of localisation. This will be a challenge for SMEs looking for global opportunities as well as large companies operating in several countries as can be seen in the bricks sub-sector. The primary contribution and managerial implication of the study establishes relationship between standardisation and firm performance in a specific 249
product category. There is a need to improve the competitive environment for the refractory industries in domestic markets and in export markets. Refractory industries producing their products with lower energy prices and perhaps better access to raw materials and thus delivering standardised products at a much lower cost. So the top refractory players in Orissa can go for more standardised products in developed countries without ignoring developing countries. Research may be conducted further to investigate the relationship established in this study regarding performance and standardisation process. Different company groups, a larger sample, and low industry variance may produce wider results. Hopefully, the theoretical and empirical contribution of this study may expand the knowledge base in the area of standardisation in international marketing.
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37.Miles, Matthew B. and A.M. Huberman (1984), Qualitative Data Analysis: A Sourcebook of New Methods, Newbury Park, CA: Sage. 38.Narver, John C. and Stanley F. Slater (1990), "The Effect of a Market Orientation on Business Profitability," Journal of Marketing, 54 (October), 20-35. 39.Narver, John C. and Stanley F. Slater (1991), Becoming More MarketOriented: An Exploratory Study of the Programmatic and Market-Back Approaches, Cambridge, MA: Marketing Science Institute, Report No. 92-128. 256
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Websites:
1. http://www.business-standard.com/india/news/refractory-exports-tocome-down-by-25/352818/ 2. http://www.angeltrade.com : accessed 2009. 3. http://www.manishri.com: accessed 2009. 4. http://www.sarvesh.com/product_directory.html: accessed 2009. 258
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Magazines:
1. Iron & steel review, published by central iron and steel research institute,Kolkata,oct-2010.
2. Steel Insights, 2010,monthly issue published by mjunctionEdge.
3. Steelworld, published by steelworld’s publications,Mumbai, March 2009.
259
Major Refractory manufacturers in India Ace
Calderys
Ltd,
Nagpur, Murugappa Morgan Thermal Ceramics
Maharastra
Ltd.,Parrys, Chennai.
Achint
National Refractories,Morbi, Gujarat
Chemicals,Bhilwara,Rajasthan Andhra
Refractories
& Nagpur
Ceramics
Pvt.
Ltd,
Nagpur,
Monolithics,Rajahmundry,Andra Maharastra Pradesh Apodictic
Ceramics
Pvt. Neco Ceramics Ltd.,Bagadganj, Nagpur
Ltd.,Chirkunda,Jharkhand Ashoke
Refractories
Pvt. Nilachal Refractories Ltd., Ipitata nagar,
Ltd.,Nirsha,Jharkhand
Dhenkanal
Associated Ceramics Ltd.,KolkataNoble Refractories, Hasanpar, Gujarat Barakar
Pvt. OCL India Ltd., Rajgangpur, Odisha
Refractories
Ltd.,Barakar, Kolkata Bharat Refractories Ltd., Bokaro, Orient Abrasives Ltd.,Porbandar, Gujarat Bihar Bilaspur
Ceramics
Pvt. Orkla
Ltd.,Bilaspur, Chhatisgarh. Burnpur
Ceramics,
Pvt.
Ltd.,Navi
Mumbai,
Maharastra
Burnpur, Perfect Refractories, Jabalpur , Madhya
Kolkata
Pradesh
Carborundum
Universal
Chennai, Tamil Nadu Castwel
Industries,
Maharastra Chandi
India
Ceramic,
Dhanbad Chhotanagpur
Ltd., Premier Refractories of India (P) Ltd., Katni, Madhya Pradesh
Nagpur, Prism Monolithics Pvt. Ltd.,Porbandar, Gujarat Chirkunda, Progressive
Refractory
&
Monolithics,
Ramgarh, Jharkhand Refractories., Pyroceramics, Maithon, Jharkhand 260
Hatia, Ranchi Continental
Refractories
Pvt. Raasi Refractories Ltd., Hyderabad, Andhra
Ltd.,Indore, Madhya Pradesh
Pradesh
Duns Ceramic Industries, Ranchi, Raj Ceramics, Hardag, Ranchi Jharkhand Eastern Refractories Ltd., Jhansi, Raj Refractories, Hospet, Karnatak Uttar Pradesh Gita
Refractories
Pvt. Refcom (India) Pvt. Ltd., Puruliya, Kolkata
Ltd.,Bhoopasandra, Bengaluru Hazira Refractory Works Pvt. Reliable Refractories Pvt. Ltd.,Bhilwara, Ltd.,Nanpura, Surat Hi-Tech
Rajasthan
Chemicals
Pvt. Sarvesh Refractory Pvt. Ltd., Rourkela,
Ltd.,Jamshedpur, Jharkhand
Odisha
RefractoriesSatyam Ceramics, Porbanar, Gujarat
IFGL
Ltd.,Kalunga, Odisha Industrial Associates, Howrah, Shanark Kolkata Jai
Trading
Ltd.,
Co., Sharad Refractories Pvt. Ltd.,Chirkunda,
Manimajra, Chandigarh
Dhanbad
Refractories
Pvt. Sharada Ceramics Pvt. Ltd., Ambattur,
Ltd.,Katni, Madhya Pradesh Jay
Pvt.
Nagpur,Maharastra
Durge
Jamuna
Industrial
Matadee
Fire
Chirkunda, Dhanbad
Chennai
Bricks, Shree Mahabir Refractories Works,Hatia, Ranchi
Joglekar Refractories & Ceramics Shreekant Industries, Bhilai, Chhatisgarh P. Ltd., Rabale, Mumbai Kartar
Ceramics
(P)Shri Balaji Ceramics,Bhiwadi, Rajasthan
Ltd.,Ludhiana, Punjab Katni Tile Works, Katni, MadhyaShri Nataraj Ceramic & Chemical Ind. Ltd. 261
Pradesh Koromandal
Refractories
(P)Special Ceramics (P) Ltd.,Alwar, Rajasthan
Ltd.,Hubli, Karnataka Kumar Techno Refractories Mfg. Steelage Refractories Pvt. Ltd., Mandi Co. Pvt. Ltd., Chitrakoot, Kolkata Gobindgarh, Punjab Lloyd
Insulation
(India)Tata Refractories Ltd., Belpahar,Odisha
Ltd.,Panjagutta, Hyderabad Mahakoshal
Refractories
Pvt. Vesuvius India Ltd., Taratolla, Kolkata
Ltd.,Katni, Madhya Pradesh Maithan
Ceramic
Ltd., Vidharbha
Chirkunda, Dhanbad Manishri Ceramics
Ltd.,Nagpur,Maharastra
Refractories P.
Ltd.,
Ceramics
& Vishva Vishal Engineering Ltd.,Bhilai, Durg
Cuttack,
Odisha Megha
Insulations
Ltd.,Bhavnagar, Gujarat
Pvt. Vishwakarma
Refractories
Ltd.,Kolar,
Bangalore
262
Marketing offices of Refractory Producer in Orissa
Tata Refractories Ltd…. Head Office TRL Krosaki Refractories Limited Tata Center,11th Floor 43 J.L Nehru Road Kolkata, West Bengal, India Pin : 700071
Registered Office TRL Krosaki Refractories Limited Belpahar Dist: Jharsuguda, Odisha, India Pin : 768218
Domestic Marketing Mr.Soumyadip Roy XLRI Campus, Circuit House Area(East) Jamshedpur, India Pin : 831 001 Phone: 0657-2231 331/087,2225986, 2231275 Fax : 0657 2231389 Mobile : 09234602644 E-mail:
[email protected]
263
JAMSHEDPUR(East Zone) Mr.Sandeep K Datta XLRI Campus, Circuit House Area(East) Jamshedpur, India Pin : 831 001 Phone: 0657-6515426,2225003 / 2225986 / 2221937 Fax : 0657 2231389 Mobile : 09234554250 E-mail:
[email protected]
KOLKATA(East Zone) Mr.Shirshendu Chatterjee Tata Center,11th Floor 43 J.L Nehru Road Kolkata, West Bengal, India Pin : 700071 Phone: 033-65500466 Fax : 033-22881063/65 Mobile : 09231064424 E-mail:
[email protected]
VIZAG(East Zone) Mr. Arabinda Manna Marketing Manager Door No:8-4-18/5,Maruti Nagar Old Gayuwaka Visakhapatnam, India Pin : 530026 264
Phone: 0891-2768842 Mobile : 09238068053 E-mail:
[email protected],
[email protected]
BELPAHAR(Central Zone) Mr. Indrajit Ghosh Belpahar Jharsuguda, Odisha, India Pin : 768 218 Phone: 06645-2583/659/385 Fax : 06645 250243 Mobile : 07894441752 E-mail:
[email protected]
MUMBAI(West Zone) Mr.Asoke Tripathi 503 Nalanda Chambers Near Gaondevi Temple,Gokhale Road Navpada Thane(W) Mumbai, India Pin : 400602 Phone: 022-67971072, 64503509, 67922120 Fax : 022-6792 1903 Mobile : 09820348020 E-mail:
[email protected] Mr.Subhashis Paul Mobile : 09820143242 E-mail:
[email protected],
[email protected] 265
BENGALURU(South Zone) Mr.Sanat Ganguli 197, 4th Floor, S & S Elite Building, 10th Cross, CBI Road, Ganganagar, R T Nagar Post, Bengalure-560032 Bengaluru, India Pin : 560032 Phone: 080 65832067-69 Fax : 080 4216674 Mobile : 09686200401 E-mail:
[email protected]
DELHI(North Zone) Mr. Narendra Sachdeva No.-1102, Block-B-8, GD-ITLTowers, Netaji Subash Place, Ring Road Pitampura Delhi, India Pin : 110 034 Phone: 011- 47003107, 27352439, 27355933 fax: 011-27355933 Mobile : 09810397504 E-mail:
[email protected]
International Business Mr.Sunanda Sengupta Tata Centre, 11th Floor 43 J.L.Nehru Road 266
Kolkata, West Bengal, India Pin : 700071 Phone: 033-64990528, 65500216 Fax : 033-22881063/1065 Mobile : +91 9231065368 E-mail:
[email protected]
Nilkantha Brahmachari Phone : 033-64990527 Mobile:+91 9007152537 Email:
[email protected],
[email protected] REFRACTORY ENGINEERING & MANAGEMENT SERVICES (REMS) Mr.P.K.Jana Belpahar, Jharsuguda, Odisha-768218 Mobile : 09238067919 Email:
[email protected] /
[email protected] Works Mr.P.B.Panda Belpahar Jharsuguda, Odisha, India Pin : 768 218 Phone: +91(06645)250249,250264,250273 Fax : +91 (06645) 250254,250243 E-mail:
[email protected],
[email protected],
[email protected] 267
Operations JAMSHEDPUR Mr.B N Mohanty XLRI Campus, Circuit House Area(East) Jamshedpur, India Pin : 831 001 Phone: 0657-2225986/5172,2231087/1336/1331/1275 Fax : 0657 2231389, 2231155 E-mail:
[email protected] SALEM Mr.V. Padmanavan Salem Karuppur, Tamil Nadu, India Pin : 636 012 Phone: 0427-2346 350-51,234 5900 Fax : 91 427 23463350/51 Mobile : +91 9244433729 E-mail:
[email protected] CHINA (TRL-CHINA) Mr. S K Banerjee TRL China Limited Metallurgical and Chemical Industrial Park Bayuquan, Yingkou Liaoning Province, China Pin : 115212 Phone: +86 417-7233803 Fax : +86-417-723392 268
Mobile : +86 1520417 7363 E-mail:
[email protected] GUJARAT Mr.M C Pradhan Samkhiyali, Survey-No-549-552/2 National Highway No-15 Village-Lakadia Taluka-Bhachau Kutch, Gujarat, India Phone: 02837 283529 Fax : 02837 283591 Mobile : 09909924845 E-mail:
[email protected] JHANSI Mr.M C Pradhan E-mail:
[email protected] Mr.Raj Sekhar Sen Vill: Harshmau, Tehsil: Niwari Tikamgarh, Madhya Pradesh, India Phone: Fax : 07680232205 Mobile : 09389191411 E-mail:
[email protected] Mr.H.S.Panda Mobile : 09389191410 269
E-mail:
[email protected]
HYDERABAD Mr.M C Pradhan E-mail:
[email protected]
Mr. P.Sivaji E-mail:
[email protected] Mobile : Lakshmipuram, Narketpally Dist: Nalgonda, Hyderabad, Andhra Pradesh, India Pin : 508254 Phone: 08682-272765 Fax : 08682-272444
Ifgl refractories Ltd
Registered Office and Works Sector ‘ B ‘ Kalunga Industrial Estate P. O. Kalunga 770 031 Dist: Sundergarh (Orissa), India Phone : + 91 661 2660195 Fax: +91 661 2660173 E-mail:
[email protected]
270
Head and Corporate Office Mcleod House, 3, Netaji Subhas Road, Kolkata 700 001 Phone: +91 33 22482411 Fax : +91 33 22430886 E-mail:
[email protected] Website: www.ifglref.com Foreign Offices: Mono Ceramics Inc. 2235, Pipestone Road, Benton Harbour, Michigan,49022, USA Email:
[email protected]
Monocon Refractories International Ltd Old Denaby,Doncaster, South Yorkshire,DN 12 4LQ,UK Email:
[email protected]
Monotec Refractoies Ltda. Av. Jandira, 316 Conj.4 Cep 04080 -001, Sao Paulo, Brazil. Email:
[email protected]
Tianjin Monocon Aluminous Refractories Co. Ltd No 33, Bai He Road, Jin Bin Email:
[email protected]
271
OCL India Ltd HEAD QUARTER ( RAJGANGPUR ) DOMESTIC
EXPORT
Dr. N.K. Mishra
Mr. Sunil Kumar
Mob : 09437047603
Mob : 09437049342
Email :
[email protected]
Email :
[email protected]
Mr. R.K. Hota
Mr. P.Basak
Mob : 09437047630
Mob : 09437029646
Email :
[email protected]
Email :
[email protected]
NEW DELHI OFFICE
BHADRABATI OFFICE
Mr. Gursharan Singh
Mr. R.J. Pandit
OCL INDIA LIMITED
OCL INDIA LIMITED
Narain Manzil - 17th Floor, 23 Barakhamba Road, New Delhi :
Mob : 09880259423
110001 Mob : 09810476345
Email:
[email protected]
Email:
[email protected]
BOKARO OFFICE
VISAKHAPATNAM
BHILAI OFFICE
Mr. D.P. Jha
OFFICE
Mr. P.K. Chakraborty
OCL INDIA LIMITED
Mr. A.K. Lenka
OCL INDIA
Mobile : 09431128837
OCL INDIA LIMITED
LIMITED
Email :
Mobile : 09440188552
Mobile : 09425551980
[email protected]
Email:
[email protected] Email :
[email protected] 272
TATA OFFICE
SALEM OFFICE DURGAPUR OFFICE
Mr. Nihar Ranjan
Mr. D. Pandit
Swain
OCL INDIA LIMITED
OCL INDIA LIMITED
Mobile : 09434030769
Mobile : 09894794229
Email :
[email protected]
Email :
Mr. B.B. Ray OCL INDIA LIMITED Mobile : 09431301512 Email :
[email protected]
[email protected]
Sarvesh Refractories Ltd CORPORATE OFFICE: SARVESH Refractories Limited, AA - 15, Civil Township, Rourkela - 769 004, Dist. Sundergarh, Orissa (India),Contact Numbers : 91-661-3053 000 Fax Number: 91-661-240 2136 E-Mail:
[email protected] Key Person: Mr. S. Panigrahi Contact Number: +91 943 704 8414 WORK Unit I:
Unit III:
Kuarmunda,
Sipcot, C-32,
Dist. Sundergarh,
Sidco Industrial Estate,
Orissa
Hosur - 635 126 273
Key Person: Mr. R.C. Sahoo
Key Person: Mr. S.P. Singh
Contact Number: +91 943 757 5254
Contact Number: +91 989 445 1033
Unit II:
Rassi Unit:
GIDC, 1513, Kerala Industrial Estate, Lakshmipuram, Near Bavla,
P.O. Narketpally,
Ahmedabad - 382 220
Dist. Nalgonda - 508 254
Gujarat
Andhra Pradesh
Key Person: Mr. K.D. Sanghavi
Key Person: Mr. A. Prasad
Contact Number: +91 937 771 3601
Contact Number: +91 984 878 7807
Manishri Refractories and Ceramics Pvt Ltd
MANISHRI Refractories & Ceramics Pvt. Ltd. Madhupatna, Cuttack – 753 010 Orissa, INDIA. Phone : 91-671-2344292, 2344544, 2344728, 2344390. Fax
: 91-671-2341809
E-mail :
[email protected]
274
Questionnaire: 1 2 3 4
Company’s Name: Address: Year of Establishment: No of Branches /Offices
5
Any Acquisition made (Yes/No) If Yes, Name of company Type of Product Yes in which Acquired Produced
6
No of Depts./Division you have at present Is marketing a separate Dept/Division? Yes /No If yes :No of personal designation working at present in Marketing Department
7
Inside country(Pls specify)
the Outside the country(Pls specify)
Nos.
8
No of personal working at present in your organization(Approx):
9
Type of the product produced by you: Pls Name your customers India
Foreign
10
Pls mention the type of raw material required for refractory products: Name your suppliers India Foreign
11
Do you make any raw material(Yes/No) If yes, Pls mention:
275
12
Pls name the plant/production facilities: Inside the country
Outside the country
13
14
15
16
How do you produce your product Uniform Standard (Yes/No) Customized Product (Yes/No) Pls mention the production capacity of different types of product produced: Type of 2002-03 20 200420052006- 2007-08 product 03 05 06 07 04 Pls mention the total sales (volume & Value) of different types of product sold: Type of 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Vol Val Vol Val Vol Val Vol Val Vol Val Vol Val product National/Int ernational/b oth
Pls mention the country and the product (if any) exported by you for last five years Year Product Country Volume Value 2002-03
2003-04 276
2004-05
2005-06
2006-07
2007-08
277
17
Is there any occasion when product was rejected and returned by the customer? Within the country(yes/ no) Outside the country(yes/ no) If yes pls mention the reasons of rejection:
18
What criteria the product should satisfy for acceptance? 1 2 3 4 5 6 7 8 9 10 How do you shortlist possible markets (foreign ) for your products?
19
20
Pls mention your source of information for analyzing a foreign market to identify a possible market for your product?
21
How do you enter into a foreign market? (Tick the particular option) 278
a
22
Selling to a merchant exporter or exporter house in india b Selling through oversees import houses c Exporting through agents/distributors d Any other please specify Pls mention the form of organization in foreign market you have at present: Tie up company Year a Establishment of Branches/Plants b Licensing Arrangement c Joint Ventures d Appointment of Exclusive Agents e Distributors
23
Have your product ever required any adaptation for meeting the suitable to the foreign market- Yes/No If yes, how did you do (Pls specify with one or two examples).
24
Does the packaging of your product is same for domestic as well as export sale? Yes/No If No, pls mention what extra precaution you take for export sales:
25
Has any importer ever specified any packing requirement / Condition: Yes /No If yes, how does it affect your pricing? Specify it..
26
What are the strengths and weaknesses : 1. 2. 3. 4. 5.
27
What are the Opportunities and Threats : 1 2 3 4 5 279
28
6 How do you handle fluctuation in exchange rate which may cause sharp decline in the realization of export proceeds in term of rupees?
29
Pls mention your contract provision for penalty for delay / damages:
30
Pls mention the distribution logistics for selling / exporting your product: Inside the country
Outside country
31
32
33
the
How do you promote your products? Advertising Direct Personal Selling Selling Nationally Internatio nally Have you got any company logo ? Yes/No If yes :Pls attach a copy of your logo
Sales promotion
Trade Fairs/ Exhibition
Pls mention any assistance (ex. Tax, insurance , licence, SEZ etc..) you get in : Domestic marketing
International Marketing
34
Do you conduct market research periodically for : 280
Domestic Market : Yes/No (if Yes pls A tick the option how you do:) B
35
36
37
By own marketing personnel By own personnel of ,marketing research dept C By hiring marketing research agency International Market: Yes/No A By own marketing personnel B By own personnel of marketing research dept C By hiring marketing research agency Pls mention the innovative marketing initiatives adopted by the company:
How do you get the payment of the goods successfully sold by you? (pls tick the suitable option stated below) Domestic Market International Market 1 Payment in advance Payment in advance 2 Down payment +installment Open account 3 Credit allowed for a limited Letter of credit` period with rebate 4 Any other method please specify Documentary bills 5 Shipment on consignment basis Do you think that present Govt. policy favors you? Yes/no If Yes, how? Domestic Market International Market
If No, how?
38
39
Pls mention the type of risk you face while marketing your goods in : Domestic Market International Market
Pls mention the competitive advantages and core competencies of the company: Competitive advantages: 1. 2. 3. 4. 5.
Core competencies
281
40
Product Category/Product Name: (rate the degree of standardisation on a five point scale (5=standardised and 1= not standardised) for each of the eleven elements of standardisation.) Elements of standardization strongly agree - agree - neither agree or disagree disagree - strongly disagree (Non standardized) (standardized/non standardised) ( standardized)
1.Brand name 2.Product Characteristics 3.Packaging and Design 4.Product positioning 5.Pricing 6.Advertising theme 7.Advertising copy and layout 8.Media allocation 9.Sales promotion 10.Distribution 11.Public relations
282
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